Israel’s Iran attack rattles oil markets, puts spotlight on Saudi output and US ties

Israel’s Iran attack rattles oil markets

Israel’s surprise military strike on Iran has jolted oil markets and cast fresh attention on the recent production decisions by Saudi-led Opec+, sparking debate over whether Riyadh ramped up oil output to support US strategic aims in the region, the Financial Times reported.

Opec+ boosted supply ahead of crisis

In an unexpected move earlier this year, Opec+ accelerated the return of idle crude oil production despite falling prices. While some market watchers viewed this as a response to US pressure—particularly from President Donald Trump—others argue the group had independent reasons.

Bob McNally, a former White House energy adviser, suggested Trump’s priorities—countering Iran, controlling inflation, and isolating Russia—aligned with more oil on the market, but cautioned against assuming a direct quid pro quo. Still, Trump had publicly urged Saudi Arabia to help lower fuel costs, with some analysts speculating this may have been a prelude to a military confrontation with Iran.

Saudi reluctance shaped by past mistakes

While the White House may have wanted more Saudi oil, Riyadh appeared wary of repeating past missteps. In 2018, after Trump urged Opec to pump more oil ahead of sanctions on Tehran, he ultimately granted waivers to buyers of Iranian crude. That decision sent global oil prices crashing below $50 a barrel—well below many producers’ budget needs.

Saudi energy minister Prince Abdulaziz bin Salman reportedly warned internally against repeating that error. Although Opec+ production cuts were initially intended to support higher prices, they were losing effectiveness, prompting Riyadh to reclaim market share as other members—like Kazakhstan—exceeded their output limits.

Oil as leverage in broader US-Saudi ties

Some analysts suggest that Saudi Arabia’s production changes may have been aimed at securing strategic benefits from Washington beyond oil. Helima Croft of RBC Capital Markets pointed to Trump’s recent visit to Riyadh, during which the Saudis reportedly made progress on US-supported initiatives, including AI development, nuclear energy, and defense cooperation.

“Though there has been significant push back against the suggestion that there was a ‘pump for Trump’ deal,” Croft noted, “Riyadh came away from the Trump visit with significant deliverables.”

Trump’s options narrowing amid price surge

Following Israel’s attack, crude prices spiked sharply on Friday, raising fresh inflation concerns for the US economy. Analysts say this complicates Trump’s approach to other geopolitical flashpoints, including potential new sanctions on Russia. Kevin Book of ClearView Energy Partners said Opec+ supply boosts might offset disruption from either Iran or Russia—but not both.

To manage the fallout, Trump could tap the US Strategic Petroleum Reserve (SPR), which now holds about 400 million barrels after drawdowns during the Biden administration. Alternatively, he could pressure Riyadh to increase production further, though that may prove diplomatically sensitive.

Riyadh caught in regional balancing act

Iran remains a founding member of Opec, and Saudi Arabia is currently navigating a cautious détente with its Gulf neighbours. Analysts believe Riyadh will be reluctant to jeopardize those efforts, even if pressured by Washington.

“When oil prices go up, the president calls Saudi Arabia,” said McNally. “But this time, the answer might not come as quickly.”