S&P 500 oil stocks rumbled higher Friday as oil prices soared to the highest level since February following a series of Israeli airstrikes vs. Iran overnight. Israel targeted key nuclear facilities and military targets with the strikes continuing Friday. Oil prices, held low by a weak supply/demand picture, could move even higher if the European Union moves ahead with a new round of sanctions on Russia.
U.S. West Texas Intermediate crude rose to around $77 per barrel, hitting the highest level in four months. Its price cooled to a 7.3% gain, just above $73 per barrel on Friday. Brent crude, the international benchmark, traded at about $74.20 on Friday.
Dozens of targets were hit as 200 jet fighters wrapped up the first wave of the attack, according to Israeli officials. Iranian Commander Hossein Salami and two other generals were reported killed, punching a deep hole in Tehran's military leadership, the Wall Street Journal reported.
Israel's Prime Minister Benjamin Netanyahu, in a televised address, said Operation Rising Lion "will continue for as many days as it takes to remove this threat," referring to Iran. Iranian Supreme Leader Ayatollah Ali Khamenei said Israel "should expect severe punishment" for the strikes.
Top Iranian Scientists Likely Killed
Top Iranian nuclear scientists were also likely killed in the initial attack, according to multiple reports. Iran launched over 100 drones at Israeli in response, with Israel saying it shot most of those down. Iranian state media said Friday more Israeli attack targeted the northwestern city of Tabriz. Tasnim news agency said Tabriz Airport was "currently under heavy Israeli attack."
Expectations of an Israeli attack on Iran had grown in recent days. Earlier Thursday, President Donald Trump publicly opposed an Israeli attack, saying a nuclear deal was still possible.
Meanwhile, oil traders appear to be weighing the U.S.-China trade deal and the potential for additional European Union sanctions against Russia with the possibility for new sanctions from the U.S. as well. Oil prices had appeared to find support, despite a bearish supply-demand picture, after the U.S. and China on Tuesday agreed to the framework for a trade deal, boosting optimism for energy demand from the world's two largest oil consumers.
Emergency Oil Stocks?
International Energy Agency (IEA) Executive Director Fatih Birol posted to X early Friday that the organization is "monitoring the impact on oil markets from the Israel-Iran situation"
"Markets are well supplied today but we're ready to act if needed," Birol wrote, adding that the IEA oil security system has a large emergency stock of oil that "has proved vital to safeguarding the world economy."
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The Secretary General of the Organization of Petroleum Exporting Countries, or OPEC, responded Friday that "there are currently no developments in supply or market dynamics that warrant unnecessary measures."
"Today's statement in social media by the IEA executive director regarding current market conditions and potential use of oil emergency stocks, raises false alarms and projects a sense of market fear through repeating the unnecessary need to potentially use oil emergency stocks," OPEC wrote on X.
CFRA analyst Stewart Glickman wrote Friday that "Israel's surprise attack on Iran's nuclear facilities triggered significant volatility in crude oil markets."
"The market's measured response reflects potential Iranian retaliation scenarios, ranging from conventional strikes to disruption of the Strait of Hormuz, which could affect 15 mmb/d of global crude movement. We believe oil prices could quickly retreat if Iran's response remains limited, but could surge beyond $100/bbl if Iran moves to disrupt oil transit. Today's price movement likely bakes in some impact to Iran's own exports (perhaps 1.5 mmb/d) but not a much larger escalation," Glickman added.
S&P 500 Oil Stocks Respond
Oil stock dominated the S&P 500, holding most of the index's 20 largest gains in premarket trade. Chevron led the Dow Jones Industrial Average. Diamondback Energy and Baker Hughes topped the Nasdaq 100.
Among S&P 500 oil stocks, Devon Energy moved 3% higher during regular stock market action on Friday.
Fellow S&P 500 oil stocks, Diamondback Energy and APA rose 3.7% and 5.3%, respectively Friday.
Among the largest oil and gas names, S&P 500 giants Chevron and Exxon Mobil rose during Friday's stock. Exxon Mobil and Chevron stock both edged up marginally on Thursday.
The U.S. supermajors are both trading nearly flat in the 2025 stock market. The two companies were expected to post sales and earnings declines through the rest of this year.
ConocoPhillips, Other Majors Climb On Friday
ConocoPhillips gained 2.4% Friday. U.S. producer Occidental Petroleum moved 3.8% higher.
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S&P 500 oilfield service plays Halliburton and SLB, formerly Schlumberger, gained 5.5% and 1.9%, respectively. Baker Hughes edged up 1%.
Other explorers showing some healthy recent action and strong outlooks include Expand Energy, Antero Resources and Range Resources. Expand and Range Resources are primarily producers of natural gas.
Drilling and subsea equipment provider TechnipFMC is in a buy zone following a breakout. Offshore support play Tidewater has broken a downtrend.
Natural gas producer Comstock Resources reversed 1.2% lower Friday, after adding 7% on Thursday. It is extended after an early May breakout, and has gained more than 30% in this year's stock market.
Russia Sanctions And Oil Prices
While U.S. oil prices are soaring on the increased tensions in the Middle East, they could move even higher.
The European Commission announced Tuesday its latest sanctions proposal, which would lower the oil price cap from $60 to $45 per barrel and ban the use of the Nord Stream pipeline to funnel natural gas between Russia and Germany. Sanctions leading to lower oil sales from Russia would effectively reduce global supply, helping to force oil prices higher.
The plan also lists 77 vessels, part of what is called the "shadow fleet" of essentially bootleg oil and oil products tankers delivering sanctioned Russian products. That brings the number of blacklisted shadow fleet ships to 419. The ships are banned from calling at EU ports, or from receiving EU services including insurance or refueling.
How Russia might respond to the sanctions is an unknown. When the $60 price cap was imposed, Russia said it would refuse to sell oil at that price. But G7-based finance companies are only allowed to transport and provide services (i.e. financing) to Russia oil shipments respecting the price cap.
There would be strong demand for Russia oil at $45, so oil supplies might not be diminished. If Russia refused to sell at $45, it could mean some significant amount of Russian oil being removed from the market. That would send oil prices sharply higher.
Proposed New Sanctions On Russia Before EU Members
The New York Times reports that the proposed plan is the 18th round of sanctions forwarded by Brussels since Russia began its full-scale invasion of Ukraine in February 2022. The package still needs to be approved by EU member states.
Politico reported Thursday that Slovakia and Hungary could block the EU proposal.
Trump has also threatened Russia with a new round of tighter sanctions if the country does not dial down its attacks against Ukraine and come to the table to negotiate a ceasefire.
So far, Russian President Vladimir Putin has maintained and even intensified his country's attacks on Ukraine.
U.S. Oil Production
The Energy Information Administration (EIA) revised lower its U.S. crude oil production estimates this week. In its latest Short-Term Energy Outlook, released Tuesday, the EIA said output would decline by 50,000 barrels in 2026 to 13.37 million barrels per day. This would be the first decline on an annual basis in U.S. output since 2021. The EIA left projected output growth for 2025 unchanged at 210,000 barrels per day.
"The decline isn't too surprising, given the recent slowdown in drilling activity. The low-price environment has seen the rig count fall by 33 over the last six weeks to 442, the lowest since October 2021. Given our view that oil prices will be lower towards the end of this year, there's scope for further downward revisions in U.S. crude oil output estimates for next year," ING analyst Warren Patterson wrote Wednesday.
Sustained higher oil prices could spur a rebound in U.S. drilling.
Meanwhile, earlier this month, the Saudi Arabia-led Organization of Petroleum Exporting Countries and its allies, including Russia, announced it would raise oil output in July by the same amount as in the previous two months.
OPEC Adding To Daily Supply
The oil cartel, OPEC+, agreed to add 411,000 barrels a day of supply. This means that, by the end of July, OPEC+ will have brought back more than 60% of its planned supply increase of 2.2 million barrel per day, according to a June 2 note from ING.
This comes as Trump has repeatedly pledged to convince producers to drill for more oil.
Trump on Thursday publicly told U.S. Secretary of Energy Chris Wright that he doesn't "like that the oil prices have gone up."
"I was going to call and really start screaming at you. Are we OK? Nothing wrong? Right? Is going to keep going down, right? Because we have inflation under control," Trump said, speaking from the White House to a crowd that included Wright.
Please follow Kit Norton on X @KitNorton for more coverage.
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