Crude oil prices surged on Wednesday following reports that Israel may be preparing to launch airstrikes on Iranian nuclear facilities — a move that could unravel fragile diplomatic negotiations between Washington and Tehran.
Brent crude rose to $66.37 per barrel, while West Texas Intermediate traded at $62.56, as fresh U.S. intelligence indicated that Israel is seriously considering military action. CNN, citing multiple U.S. officials familiar with the intelligence, reported that Israeli preparations include movements of air munitions and recent air force exercises.
The prospect of a strike has stoked fears of another regional conflict in the Middle East and overshadowed bearish market indicators, including a 2.5 million barrel build in U.S. inventories and news of overproduction by Kazakhstan, which increased oil output by 2% in May despite pressure from Saudi Arabia to comply with OPEC+ quotas.
According to senior U.S. officials, a direct strike on Iran would represent a “brazen break” with President Donald Trump’s ongoing diplomatic efforts aimed at reviving a nuclear agreement with Tehran. While no final decision has been made by Israel, multiple sources revealed to CNN that the probability of a strike has grown in recent months.
“The chance of an Israeli strike on an Iranian nuclear facility has gone up significantly,” one unnamed official said, citing Israel’s dissatisfaction with the pace and potential outcome of U.S.-Iran talks.
President Trump reportedly issued a 60-day deadline to Iran’s Supreme Leader Ayatollah Ali Khamenei in March, warning that diplomatic avenues would not remain open indefinitely. That deadline has already lapsed, and sources suggest that the Trump administration is now evaluating its next steps.
Israeli calculations hinged on Trump-Iran deal outcome
Experts believe that any Israeli decision will hinge on the outcome of negotiations between the U.S. and Iran. Jonathan Panikoff, a former senior U.S. intelligence official, told CNN that Israel is caught "between a rock and a hard place"—balancing the need to act against Iran’s nuclear ambitions with the risk of straining its critical relationship with Washington.
“Israeli decision-making is going to be predicated on U.S. policy determinations and actions,” Panikoff noted. He added that Israeli Prime Minister Benjamin Netanyahu is unlikely to act without at least tacit approval from the Trump administration.
Despite this, an Israeli source told CNN that the country is prepared to act unilaterally if the U.S. concludes a “bad deal” that fails to sufficiently curb Iran’s nuclear capabilities.
Window of opportunity
U.S. officials say Iran is currently in its weakest military position in decades. Israeli strikes in October significantly damaged Iran’s missile production sites and air defenses. Tehran’s economy, further weakened by prolonged sanctions, has also strained the country’s regional proxy forces.
This vulnerability has prompted Israel to consider taking action while Iran remains relatively weakened. Still, analysts note that Israel lacks the capacity to fully dismantle Iran’s nuclear program without American military support, including midair refueling and bunker-busting munitions.
A February U.S. intelligence assessment found that even if Israel were to strike, the impact would only temporarily set back Iran’s nuclear capabilities.
Stalemate in talks as enrichment remains key obstacle
At the heart of the stalled negotiations is a dispute over uranium enrichment. The U.S. demands that Iran cease all enrichment, citing the risk of weaponization. Iran, however, insists on its right to enrich uranium under the UN Treaty on the Non-Proliferation of Nuclear Weapons.
Special envoy Steve Witkoff, leading the U.S. delegation, emphasized over the weekend that “even 1% of enrichment capability” would be unacceptable to Washington. While both sides have put forward proposals, no final agreement has been endorsed by President Trump.
Supreme Leader Khamenei, speaking on Tuesday, expressed pessimism about the outcome of the talks, describing the U.S. demands as a “big mistake.”
Another round of negotiations may take place in Europe later this week, according to Witkoff. Talks have been facilitated by Oman, but despite more than a month of backchannel discussions, a breakthrough remains elusive.
As geopolitical tensions escalate, oil markets remain sensitive to any developments in the U.S.-Iran-Israel triangle. The uncertainty surrounding Israel’s intentions, coupled with stalled nuclear negotiations, is likely to continue fueling market volatility in the coming weeks.
With the region already on edge after the 2023 Gaza war and ongoing proxy conflicts, any miscalculation could trigger a wider crisis — and further disrupt global energy markets.
