Oil Prices Decline 4% Amid Iran's Military Retaliation Against US

HOUSTON — Oil prices experienced a notable decline of more than $3, or 4 percent, on June 23, 2025, following Iran's military attack on a U.S. military base in Qatar. This action was framed as retaliation for recent U.S. strikes targeting Iran's nuclear facilities. Brent crude futures fell by $2.91, settling at $74.09 per barrel, while West Texas Intermediate (WTI) crude dropped by $2.80 to $71.06, as reported by Reuters.

The geopolitical tensions escalated sharply on Monday when explosions were reported over the Qatari capital, Doha. This followed statements from Western diplomats indicating a credible Iranian threat against the U.S.-operated al Udeid air base, which has long been a focal point of military operations in the region. "Oil flows for now aren't the primary target and are likely not to be impacted. I think it’s going to be military retaliation on U.S. bases and/or targeting Israeli civilian assets," stated John Kilduff, a partner at Again Capital.

In response to the escalating violence, Qatar closed its airspace, while the United Arab Emirates restricted flights based on air traffic control advisories. U.S. President Donald Trump confirmed that U.S. forces had "obliterated" significant Iranian nuclear sites, following a joint military assault with Israeli forces. Iran’s reaction emphasized its commitment to defending its sovereignty and retaliating against U.S. interests in the region.

International maritime operations were also affected, as two supertankers altered their routes near the Strait of Hormuz amid fears of further military actions. This strait is crucial for global oil supply, with approximately 20% of the world’s oil passing through its waters. Despite these tensions, analysts suggest the risk of a complete shutdown remains low.

Energy Aspects, a consultancy firm, indicated that the recent military actions could serve as a potential de-escalation point, provided there are no U.S. casualties. They noted, "Unless there are indications of further Iranian retaliation or escalation by Israel/the U.S., we may see some geopolitical risk premium come out of the price in subsequent days."

Iranian officials stated that the U.S. attacks had broadened the range of legitimate military targets for their armed forces, with high-ranking officials labeling Trump as a "gambler" for engaging in military campaigns against Iran.

Moreover, Trump has publicly expressed his desire to maintain low oil prices amidst fears of conflict-induced spikes. On his social media platform, he urged the U.S. Department of Energy to increase domestic oil production, stating, "drill, baby, drill. I mean now."

As the situation unfolds, investors are closely monitoring the geopolitical risk premium associated with oil prices. HSBC forecasts Brent crude could rise above $80 a barrel if the probability of a Strait of Hormuz closure increases, although prices may stabilize if the threat of disruption diminishes.

Additionally, Iraq's state-run Basra Oil Company has reported that several international oil companies, including BP, TotalEnergies, and Eni, have begun evacuating staff from oilfields in response to the heightened tensions. This reflects the broader impact of geopolitical instability on global oil supply chains and market dynamics.

The current situation underscores the fragile balance of power in the Middle East and its direct implications on global energy markets. As military actions continue to escalate, the international community remains watchful for potential shifts in oil supply and pricing in the coming weeks.