European oil stocks gain as Israel-Iran tensions escalate

Published 2025-06-13, 05:14 a/m
© Reuters

Investing.com -- European oil stocks climbed Thursday after Israel carried out airstrikes on Iranian nuclear and military targets, raising fears of broader regional conflict and potential disruption to global oil supplies.

Shares of Var Energi, BP (NYSE:BP), Shell (LON:RDSa), Eni, Aker, Equinor, Tullow Oil (LON:TLW) and TotalEnergies (EPA:TTEF) were up between 1% to 4% at 05:10 ET (09:10 GMT).

BP, Shell and TotalEnergies rose alongside Brent crude, which surged following reports that Israel had struck Iran’s Natanz uranium enrichment facility and killed key figures in the Islamic Revolutionary Guard Corps, including IRGC Commander Hossein Salami, according to Iranian state media.

The Natanz site, which houses older centrifuges, was reportedly hit, though no confirmation was available on the more fortified Fordow facility.

The strikes mark a sharp escalation in Israeli military action, aimed at curbing Iran’s nuclear capabilities.

Citi Research analysts said the heightened geopolitical risk has driven oil’s price premium higher. Investors are focused on the potential for retaliation by Iran that could extend beyond Israel and affect regional energy infrastructure.

The Strait of Hormuz, where about 20.9 million barrels per day of crude and petroleum products are transported, is viewed as a key flashpoint.

Citi noted that while Iran may struggle to fully close the strait due to the U.S. Fifth Fleet’s presence in Bahrain, it could still disrupt shipping by deploying mines or targeting tankers.

During the 1980-1988 Iran-Iraq war, hundreds of commercial vessels and oil facilities were attacked in efforts to choke off rival revenue. That history has resurfaced in market fears over renewed Iranian actions.

Israel appears to have avoided striking Kharg Island, which handles roughly 90% of Iran’s oil exports.

However, Citi analysts cautioned that if the military campaign continues, Israeli forces may eventually target it to undercut funding for Iran’s proxy network.

The International Atomic Energy Agency reported that Iran breached non-proliferation obligations, further complicating the situation.

Israeli Prime Minister Benjamin Netanyahu said Iran now possesses enough enriched uranium for nine atomic bombs and defended the strikes as a preventive measure.

The White House said Israel acted independently and warned Iran against attacking U.S. assets or personnel in the region. U.S. President Donald Trump, who has pushed for diplomatic talks with Iran, previously enforced a red line on American casualties, including ordering the 2020 drone strike that killed Quds Force leader Qassem Soleimani.

Citi noted that Iranian-backed militias, including those in Iraq and Yemen, remain active threats to U.S. and regional targets and could respond if ordered.

Oil markets are now watching for signs that Iran will reactivate tactics used in 2019, when tankers and regional infrastructure were targeted.

Investors are also eyeing Sunday’s scheduled U.S.-Iran nuclear talks, which now hang in uncertainty.

Citi analysts said any perceived threat to oil exports from the Gulf would likely push prices higher, with European energy equities continuing to respond to supply concerns and geopolitical developments.

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