Oil Prices Surge 3% as Iran-Israel Strikes Test Hormuz Ceasefire, June 08

Oil prices jumped on June 8 as Iran and Israel exchanged military strikes, threatening a fragile ceasefire and raising fears of wider conflict. Brent crude futures rose 3.18% to $96.05 per barrel, while U.S. West Texas Intermediate gained 3.46% to $93.67. The Strait of Hormuz has been closed for 14 weeks, creating the world’s biggest-ever supply crisis and forcing OPEC+ to approve its fourth output quota hike in four months.

Escalation Threatens Oil Market Stability

Israel struck military targets in western and central Iran on Monday, prompting Iranian retaliation and raising questions about the ceasefire. An Iranian official told media that a deal with Trump is no longer feasible. The Israeli Air Force hit targets while the U.S. military shot down Iranian drones threatening maritime traffic in the Strait of Hormuz.

Oil prices reflect the mounting tensions. Brent crude settled at $96.05 per barrel, up 3.18% on June 8. U.S. crude finished at $93.67 per barrel, up 3.46%. Regular gasoline prices have climbed to $4.09 per gallon, up $1.16 since the war began in late February.

Hormuz Closure Enters Fourth Month

The Strait of Hormuz has remained closed for 14 weeks since the conflict started on February 28. Fitch revised its 2026 Brent crude forecast to $87 per barrel from $70, reflecting the oil shock’s impact on global growth. The rating agency warned that in an adverse scenario, oil could average $100 per barrel in 2026, causing U.S. growth to fall to 0.8% over the next 12 months.

OPEC+ production has collapsed despite quota increases. Output averaged 33.19 million barrels per day in April, down from 42.77 million in February. The S&P 500 has hit new all-time highs despite the war, as U.S. investors focus on AI spending and semiconductor demand rather than energy costs.

OPEC+ Increases Output Quotas Again

OPEC+ approved its fourth output quota increase on June 7, raising targets by 188,000 barrels per day from July. This matches the June hike, which was adjusted downward from 206,000 bpd in May and April after the United Arab Emirates exited the organization after 60 years.

Seven core OPEC+ members, including Saudi Arabia, Russia, and Kuwait, have increased quotas by almost 600,000 bpd from April to June. However, analyst Jorge Leon from Rystad Energy noted that production increases mean little while the Strait remains closed. When it reopens, the market could swing rapidly from fear of shortage to fear of surplus.

Global Growth Faces Headwinds

Higher oil prices are dampening world growth prospects. Fitch warned that the oil shock is hitting global activity, with higher inflation squeezing real wages and raising company input costs. However, strong momentum in AI-related IT investment is cushioning the impact, particularly in Asia.

European stocks have been more subdued than U.S. markets due to rising energy costs. Investment strategists note that U.S. and Asian companies seen as AI beneficiaries have driven equity gains, while energy-importing economies face stagflation risks from sustained high oil prices.

Final Thoughts

Oil prices are likely to remain volatile as long as the Strait of Hormuz stays closed and peace talks stall. With Brent crude at $96.05 and geopolitical risks high, energy costs will remain a headwind for global growth through 2026.

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