Oil prices jumped sharply on Thursday following reports that Israel launched attacks on Iranian nuclear facilities in Natanz and Arak. The escalation of the conflict fueled investor concerns about a wider Middle East war that could disrupt global oil supplies.

Brent crude futures rose 1.15% to $77.58 a barrel, while US West Texas Intermediate crude climbed 1.48% to $76.25 a barrel. Analysts attributed the price increase to a “healthy risk premium” as markets await further developments in the Israel-Iran conflict, with uncertainty surrounding potential US involvement and the possibility of peace talks.

Goldman Sachs estimated that a geopolitical risk premium of approximately $10 per barrel is warranted, citing reduced Iranian oil supply and the risk of broader disruptions that could drive Brent crude above $90 a barrel. Former US President Donald Trump added to the uncertainty, stating that a US decision on joining the attacks remains pending.

The conflict, now in its seventh day, has raised concerns about potential disruptions to oil and oil product shipments through the Strait of Hormuz, a critical waterway for global energy trade. Analysts at RBC Capital warned that the risk of major energy disruptions would increase if Iran felt existentially threatened, and that US involvement could lead to direct attacks on tankers and energy infrastructure. Iran is the third-largest oil producer within OPEC, with a daily output of roughly 3.3 million barrels. The ongoing uncertainty and potential for further escalation continue to impact global energy markets.