Brent crude has rallied sharply, climbing approximately 22% in less than two weeks as geopolitical instability in the Middle East intensifies.
The move represents the most significant two-day percentage gain for the benchmark in four months, driven by fears that escalating military activity could disrupt key energy infrastructure and shipping routes.
While UBS analysts had warned of potential upside risk in late June when Brent was trading near $72, the subsequent acceleration has exceeded their initial projections.
The speed of the rally has caught many market participants off guard.
While UBS analysts had warned of potential upside risk in late June when Brent was trading near $72, the subsequent acceleration has exceeded their initial projections.
The bank’s earlier caution proved prescient, but the magnitude of the recent surge suggests that risk premiums are being repriced aggressively by traders concerned about supply continuity.
This development follows a period of heightened volatility in European fuel markets, where price caps had recently expired, leading to sharp increases in consumer costs. The current oil spike threatens to exacerbate inflationary pressures across the region, particularly as central banks remain sensitive to energy-driven price shocks.
The surge also comes after Brent had briefly stabilized around $72, a level that had offered some respite from earlier geopolitical uncertainty.
Traders are now closely monitoring developments in the Strait of Hormuz, where Iran has previously threatened tankers deviating from established routes. Any further escalation in military activity or direct threats to shipping lanes could push prices even higher, forcing a reassessment of global supply risks.