Brent crude oil prices have surged by around 20% so far this June, marking the biggest monthly rise of the year. The increase comes amid rising geopolitical tensions between Israel and Iran, adding new pressure to energy markets.
Though the price rise has been gradual, it has raised concern in financial markets. It also recalls memories of the energy price spike that followed Russia’s invasion of Ukraine three years ago—an event that triggered global inflation and aggressive interest rate hikes.
Investors Monitor Oil Supply Risks
Unlike previous sharp jumps, oil prices have steadily increased as investors find some comfort in the lack of direct disruptions to global oil supplies. But the situation may not remain calm.
This week, the premium for near-term Brent oil contracts over six-month futures rose to its highest level in half a year. This premium signals that markets are preparing for potential supply disruptions, especially in the Middle East. On Friday, that premium stayed elevated.
Despite being far below its 2022 high of $139 per barrel, Brent crude’s price—hovering near $77—is approaching levels that could stress the global economy.
“If oil moves into the $80–$100 range and stays there, we’re nearing a danger zone for the global economy,” said Christoph Boucher, Chief Information Officer at ABN Amro Solutions.
Strait of Hormuz a Key Risk Area
Energy traders are closely watching global shipping lanes. The Strait of Hormuz, located between Oman and Iran, handles about 20% of the world’s oil consumption. A blockade there could push prices above $100 per barrel, analysts warn.
Any obstruction to key shipping routes would worsen supply shocks. Nadia Martin Wiggen, head of hedge fund Svelland Capital, said that despite promises from OPEC+ countries to boost oil production by 1.2 million barrels a day, no actual increase in shipments has been seen.
“Blocked shipping routes mean those expected oil volumes won’t reach the global market,” Wiggen explained.
She’s also monitoring freight rates, a key indicator of oil demand. So far, China—the country with the largest spare refining capacity—has not begun emergency buying, which would cause freight rates to spike.
“If China starts buying in panic, freight rates will jump, and energy prices worldwide will follow,” Wiggen added.
Economic Risks: Inflation and Slow Growth
Higher oil prices often act like a tax on consumers, especially for countries that import most of their energy, such as Japan and many in Europe. These countries struggle to replace oil with other fuels in the short term.
If oil prices stay above $100 per barrel, economists estimate global growth could fall by 1%, while inflation could rise by the same amount.
“Tensions rose after Israel launched an attack on Iran last week,” said Sami Chal, Chief Economist at Lombard Odier. “If oil remains elevated, inflation could move higher and hurt economic activity.”
In the eurozone, key inflation expectations have jumped to their highest level in nearly a month, partly due to higher energy costs.
“If oil prices stay near $75, we expect consumer inflation to climb by half a percentage point—from 3% to 3.5%—by year-end,” said Frances Donald, Chief Economist at the Royal Bank of Canada.
Winners and Losers in the Oil Market Shift
The countries that import the most oil—such as Turkey, India, Pakistan, Morocco, and much of Eastern Europe—are most at risk from rising crude prices. Conversely, oil-exporting nations like those in the Gulf, as well as Nigeria, Angola, Venezuela, and to some extent Brazil, Colombia, and Mexico, are expected to benefit from stronger oil revenues.
The Dollar and Oil Prices: A Complex Relationship
The U.S. dollar, which often moves with oil prices, has shown only modest gains recently—just 0.4% this week. Analysts say this weak support comes from broader concerns about U.S. economic stability and political uncertainty.
So far in 2025, the dollar has fallen by about 9% against major global currencies. That decline has softened the impact of high oil prices for oil-importing countries, as oil is priced in U.S. dollars.
“A weaker dollar has helped cushion the blow from expensive oil,” said analysts at UniCredit. “It offers some relief for countries that buy oil using dollars.”
Stock Markets Remain Resilient… For Now
Despite rising oil prices, global stock markets remain near record highs. Investors are staying cautious but not panicked.
“Markets are waiting for clear signs that this could turn into a wider regional conflict,” said Osman Ali, Co-Head of Quantitative Investment Strategy at Goldman Sachs Asset Management.
In response to the Israel–Iran tension, Gulf stock markets initially dropped but later stabilized as oil prices climbed. Energy and defense stocks in the U.S. and Europe have performed well.
Israel’s stock market led global gains last week, rising 6%. In contrast, shares in oil-consuming sectors—especially airlines—fell sharply, highlighting the uneven impact of rising oil costs.
