Oil & Gas

Iran-Israel conflict may add up to $10 risk premium to oil

By Pramod Kumar

June 17, 2025, 8:14 AM

Smoke rises following what Iran says was an Israeli attack on Sharan Oil depot in Tehran on June 16, 2025

Brent crude hits $75 per barrel
Iran produced 3.3m bpd in 2024
Opec has spare capacity

The risk premium in oil prices linked to the Iran-Israel conflict is expected to stay within the $5 to $10 range, global ratings agency Fitch has said.

However, any disruption to Iran’s production or export infrastructure will add more upward pressure to prices.

Brent crude oil prices rose to around $75 per barrel from nearly $65 per barrel before the conflict.

The Brent crude futures contract was up 0.5 percent, at $73.6 a barrel as of 03:44 GMT, and US West Texas Intermediate crude was up 0.5 percent, at $72.10 despite rising more than 2 percent earlier in the trading session.

Fitch said Opec+ producers, which include the 13 Opec members and other countries such as Russia, Oman, Kazakhstan and Malaysia, have spare capacity of around 5.7 million barrels per day (bpd) to replace Iranian exports in the event they are halted.

Iran produced nearly 3.3 million bpd of crude oil in 2024, the ratings agency said, quoting Opec data.

However, higher oil prices will benefit the region’s oil producers through higher fiscal and external revenues, especially if they raise output to offset lower Iranian exports.

UAE stock markets recovered some ground on Monday after a sharp decline late last week, as investors re-bought property, industrial and energy shares despite acute geopolitical tensions in the Middle East.

Dubai’s benchmark index rose 0.8 percent, recouping some of its losses from Friday’s 1.9 percent drop.

The GCC markets are yet to start trading on Tuesday.

Gold rebounded after US president Donald Trump called for the evacuation of Tehran in a post on his social media platform Truth Social.

Spot gold was up 0.4 percent at $3,396.67 an ounce, as of 02:39 GMT, after falling more than 1 percent on Monday.

“Market sentiment continues to swing between escalation and de-escalation regarding events in the Middle East,” Reuters KCM Trade chief market analyst Tim Waterer said.

“These back-and-forth sentiment shifts are what is driving the gold price’s moves either side of the $3400 level,” he said.