What's Affecting Oil Prices This Week? (June 16, 2025)

The price of Brent crude ended the week at $75.18 after closing the previous week at $66.47. The price of WTI ended the week at $73.18 after closing the previous week at $64.77. The price of Oman crude oil ended the week at $73.51.

Last week, we highlighted the price movement and volatility that is being driven by news headlines, which do not necessarily change the supply and demand fundamentals. Additionally, we put forth the view that oil prices would move upward with the expectation that positive news would come out of the U.S.-China trade talks, and that the price of Brent crude would test $68, and if it broke through this level, could reach $70.

Well, the price of Brent crude did reach $70 and went higher with oil prices spiking on the news that Israel attacked Iran, which shifted the markets focus from concerns of increasing supply from OPEC+ (with members of OPEC+ having agreed to monthly supply increases of 411,000 bbl/d for three consecutive months) to concerns about potential disruption of oil supply with Israeli attacks expanding to include Iranian oil and gas facilities. Additionally, there are concerns that Iran will at some point try to disrupt the flow through the Strait of Hormuz.

In the immediate aftermath of the initial Israeli attacks on Iran, we felt there was a possibility that Iran may decide to forego any meaningful attacks on Israel, realizing that such attacks would only result in the excuse for more attacks in response, and instead, adopt the strategy of reopening nuclear negotiation with the U.S. Subsequent events, however, have shown that Iran is launching counterattacks. In response, Israel has expanded its attacks from a focus on Iran’s nuclear facilities to include Iran’s energy infrastructure. Additionally, Israel is indicating that it will put further military pressure on Iran in an attempt to initiate regime change. Out of desperation, Iran may attempt to stop oil traffic through the Strait of Hormuz, through which some 30% of global waterborne oil flows. It is highly unlikely that Iran will move to close the Strait of Hormuz since this would affect the movement of Iran’s own oil exports, but actions similar to those taken by the Houthis to disrupt flow in the Red Sea are more likely.

Another development to watch for is if any of Iran’s allies – notably Russia and China – step up their support for Iran. Russia has a 20-year strategic partnership agreement that was signed in January of this year and pertains to defense and economic development. The defense portion includes cooperation against shared threats, but not a mutual defense clause. China is Iran’s largest trading partner, accounting for more than 90% of Iran’s oil exports. China has also invested some $400 billion in Iran’s energy, transport, and industrial sectors, including the Yadavaran oil field. Besides Russia and China, North Korea cooperates militarily with Iran, including technology transfers pertaining to missiles and drones. Pakistan has condemned Israel’s attacks on Iran and voiced solidarity with Iran. The longer the conflict, the greater the risk of the other countries getting involved, much less so directly, but indirectly, including the supply of military equipment and weapons. Additionally, it will be difficult for Israel to destroy Iran’s nuclear program without the help of the U.S.

For the upcoming week, we expect that there will be further upward pressure on oil prices, since the conflict between Israel and Iran will continue to ramp up, and consequently, the price of Brent crude could reach $77. Higher prices will require signs that there is disruption to some of the oil supply, either from bombing of oil-related facilities and/or from disruption of oil flow through the Strait of Hormuz. Conversely, oil prices will drop if there are any signs that negotiations between the U.S. and Iran are resuming.

For a complete forecast of crude oil and refined products and other energy-related fundamentals and prices, please refer to our Short-term Outlook.

About the Author: John E. Paisie, president of Stratas Advisors, is responsible for managing the research and consulting business worldwide. Prior to joining Stratas Advisors, Paisie was a partner with PFC Energy, a strategic consultancy based in Washington, D.C., where he led a global practice focused on helping clients (including IOCs, NOC, independent oil companies and governments) to understand the future market environment and competitive landscape, set an appropriate strategic direction and implement strategic initiatives. He worked more than eight years with IBM Consulting (formerly PriceWaterhouseCoopers, PwC Consulting) as an associate partner in the strategic change practice focused on the energy sector while residing in Houston, Singapore, Beijing and London.