Brent crude spiked over 2.5% on Tuesday after Israel launched an airstrike on Iran’s underground uranium enrichment facility at Natanz, the International Atomic Energy Agency (IAEA) confirmed. The strike damaged critical centrifuge halls at the fortified Pilot Fuel Enrichment Plant, sharply escalating fears of regional conflict and potential supply disruptions.

At 10:38 a.m. ET, Brent was trading at $75.55, up 3.17%, while West Texas Intermediate rose to $73.94, up 3.02%. 

The direct hit on Iran’s nuclear infrastructure has reignited market concerns over retaliatory actions that could threaten the Strait of Hormuz, through which roughly 20% of global crude flows. Analysts had already been pricing a moderate risk premium, but the precision of the Israeli strike triggered a sharp repricing across crude benchmarks.

“This adds another element of uncertainty,” said Tony Sycamore, market analyst at IG, noting the move into crude and safe-haven assets, Reuters reported.

“This is a flight-to-safety event, an oil-price shock that is inflationary,” said James Rossiter, Head of Global Macro Strategy at TD Securities Europe. “You should see markets expecting an even more hawkish Fed” as energy prices feed into broader inflationary pressures.

Financial Times analysts warned that a major supply disruption “could send prices above $120 per barrel” if the conflict expands or critical shipping lanes are compromised.

While OPEC+ output remains steady, the bloc is closely monitoring the situation. Any significant escalation could leave global spare capacity dangerously thin, amplifying both price and macroeconomic risks.

U.S. intelligence sources told CNN that Iran is not actively pursuing a nuclear weapon and remains “up to three years away” from being able to produce and deploy one, suggesting the Israeli strikes may have only set Iran’s program back by months.

“This is a flight-to-safety event, an oil-price shock that is inflationary and could prompt a more hawkish Fed,” noted James Rossiter, Head of Global Macro Strategy at TD Securities Europe, as reported by Bloomberg on Tuesday. 

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com

• TotalEnergies to Spend 30% of Capex on Power Business
• Maintenance Drags China’s Refinery Throughput to 9-Month Low
• Iraq’s May Oil Exports to U.S. Surge Past 5 Million Barrels