Oil prices spiked more than 7% on Friday as a sharp escalation between Israel and Iran unnerved global energy markets. With fears mounting over potential supply disruptions, both Brent and US crude benchmarks climbed to levels not seen since January.By mid-morning in London, Brent crude was up $5.10, or 7.4%, at $74.46 a barrel, after earlier touching $78.50. US West Texas Intermediate rose to $73.15, also gaining $5.10, or 7.5%, after hitting a peak of $77.62, reported Reuters.These gains marked the steepest single-day jumps for both contracts since early 2022, when Russia’s invasion of Ukraine triggered global price shocks.Israel launched what it described as an extensive military operation against Iranian nuclear and missile infrastructure, stating the aim was to halt Tehran’s nuclear ambitions. Iran confirmed damage at its Natanz nuclear facility but said no radioactive contamination had occurred.The oil market’s immediate concern is the Strait of Hormuz, a critical maritime passage for around 20% of the world’s oil supply. While no disruptions have been reported, analysts say the risk of escalation makes the situation volatile.“The potential for spill over is real, but so far flows remain intact,” said Ole Hvalbye of SEB. “The market is watching closely.”JPMorgan warned in a note that if the strait were to be blocked or oil infrastructure in the region were targeted, prices could skyrocket to as high as $130 a barrel—nearly double current forecasts.Barclays noted that despite the price surge, the market hasn’t yet priced in any actual drop in Iranian output. Most of Iran’s crude exports head to China, putting those volumes at particular risk if tensions escalate further. OPEC+’s spare production capacity could help cushion any supply shortfall, said Janiv Shah of Rystad Energy.US Secretary of State Marco Rubio distanced Washington from Israel’s actions, calling the strikes unilateral and urging Iran not to retaliate against American interests in the region.Broader financial markets reflected investor anxiety. Stocks retreated, while safe haven assets such as gold and the Swiss franc saw inflows.“The big unknown is whether Iran limits its response to Israel or widens the conflict,” said Helima Croft of RBC Capital Markets. “Targeting military or economic assets beyond Israel could deepen the regional fallout.”While crude markets remain elevated heading into the weekend, analysts are divided on how long the rally will last, with much hinging on whether the conflict expands or remains contained.