Today's Oil Market: Price Surge Driven by Middle East Tensions

The US-Israel war on Iran has sent Brent crude past $110, wiped out roughly 9 million barrels a day of global supply, and triggered the largest single-session oil price moves since Russia invaded Ukraine in 2022.

A Market in Shock Since 28 February

The oil market has not moved this fast or this far since the first days of Russia's invasion of Ukraine in February 2022. When the United States and Israel launched coordinated strikes on Iran on 28 February 2026, killing Supreme Leader Ayatollah Ali Khamenei and hitting nuclear, missile and military sites, the market's initial reaction was an 8 to 9% single-day surge in Brent crude futures. That was only the beginning. Over the ten days that followed, the conflict widened across the Middle East, each escalation delivering a fresh jolt to global energy prices.

By 9 March 2026, Brent crude had surged past $107 a barrel, touching an intraday high of $119.50 before retreating on reports that G7 finance ministers would hold emergency talks with IEA chief Fatih Birol on a coordinated release of strategic petroleum reserves. WTI crude stood at $103.18, up 14.26% in the session alone. Oil prices had risen by more than 25% overall since the conflict began, marking the most violent sustained energy price move in four years.

The Strait of Hormuz: World's Most Critical Chokepoint

The single most consequential development for oil markets has been the effective closure of the Strait of Hormuz. This narrow waterway at the mouth of the Persian Gulf, with Iran occupying its entire northern shore, is the passage through which approximately one-fifth of the world's daily oil supply moves, along with a significant share of global liquefied natural gas shipments. When Iran declared the strait closed to tanker traffic in retaliation for the strikes, shipping traffic collapsed by more than 80% almost immediately, trapping roughly 200 tankers in the wider Gulf region with nowhere to go.

The closure has not been a temporary pause. Traders pricing in the risk of drone attacks, mines and Iranian speedboat operations have been reluctant to send vessels through even when formal permission has been implied. Amy Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University, has argued that what is needed is a credible demonstration that the maritime terror threat from automated drone speedboats, weapon-carrying flying drones and deployed mines has been fully addressed before normal tanker flows can resume.

How the Oil Shock Developed Day by Day

Infrastructure Under Attack

Iran's retaliation has not been limited to closing the Strait. Its forces have systematically targeted the energy infrastructure of regional states aligned with the US and Israel. QatarEnergy's Ras Laffan complex, the world's largest liquefied natural gas export terminal, was struck by an Iranian drone and halted all production, with sources telling Reuters it could take at least a month to return to normal output. Saudi Arabia's refining capacity was hit in strikes near Riyadh, with Saudi Aramco forced to reroute shipments. The UAE trimmed production as export constraints mounted.

The cumulative effect of these attacks has created a compounding problem. Even if a ceasefire were agreed tomorrow and the Strait reopened, damaged facilities, contaminated pipelines and production equipment that has been shut in under emergency conditions cannot simply restart overnight. Amir Zaman, head of the Americas commercial team at Rystad Energy, has noted that depending on the type of shut-in and the age of the field, it could take days, weeks or months to restore output to pre-conflict levels.

The Consumer Impact: Pumps, Heating Bills and Airfares

The price moves in the wholesale energy market are already translating with unusual speed into costs that ordinary consumers can see and feel. In the United States, the national average petrol price reached $3.41 per gallon by 7 March, a jump of $0.43 in a single week, with some stations reporting hikes of up to 85 cents per gallon. In Europe, diesel prices doubled in certain markets from their pre-conflict levels. Asia has seen the most dramatic moves in jet fuel, with prices rising by close to 200%.

The aviation industry has borne some of the most visible consumer-facing damage. More than 37,000 flights to and from the Middle East have been cancelled since the conflict began. Airlines forced to reroute around closed Gulf airspace are burning substantially more fuel on longer corridors. Airfares have spiked accordingly: a Seoul-to-London flight on Korean Air jumped from $564 to $4,359 in a single week according to Google Flights data. Deutsche Bank has warned that without near-term relief, financially weaker carriers could be forced to halt operations entirely.

Key Energy Price Moves Since 28 February

How Far Could Prices Go?

The upper bound of oil price forecasts has moved dramatically higher with each passing day of the conflict. Qatar's Energy Minister Saad al-Kaabi told the Financial Times that $150 per barrel was achievable if regional producers were forced to halt operations entirely. Iran's Revolutionary Guard Corps warned on state television that ongoing US and Israeli strikes could send global oil prices above $200 per barrel. Bank of America analysts placed $100 Brent as the threshold that becomes likely under a prolonged Strait closure, a level that has already been decisively breached.

Not all analysts share the most extreme forecasts. The Institute for Energy Research has noted that in inflation-adjusted terms, the nominal high of $145 per barrel in mid-2008 equates to approximately $220 in 2026 dollars, meaning current prices remain below historical real-terms peaks. The shale revolution has also given North America a substantial buffer: the US remains one of the world's largest oil producers, and its domestic output provides a degree of insulation from Gulf supply disruptions that did not exist during previous Middle East crises.

Who Is Feeling It Most

Frequently Asked Questions

What Comes Next?

The direction of oil prices from here is almost entirely a function of geopolitics rather than conventional supply and demand fundamentals. A ceasefire, even a temporary one, would likely trigger a sharp sell-off in crude as traders unwind the conflict risk premium built into current prices. The G7 strategic reserve release, if it materialises at scale, could provide an additional $10 to $20 per barrel of downward pressure. Either development would offer meaningful relief to consumers and businesses globally within days.

The appointment of Mojtaba Khamenei, widely regarded as a hardliner, as Iran's new Supreme Leader significantly complicates the diplomatic path. Trump's immediate rejection of the new leader as unacceptable suggests Washington is not positioning for a negotiated settlement in the near term. If the conflict extends for weeks rather than days, markets could face a prolonged period in which damaged Gulf infrastructure gradually limits supply while demand remains elevated, creating a sustained price floor well above pre-conflict levels.

For energy traders, the key variables to watch are three: any movement toward a ceasefire framework, the pace of strategic reserve releases coordinated through the IEA, and the physical condition of Gulf energy infrastructure as damage assessments become clearer. All three will determine whether the current price shock is a brief spike or the opening chapter of a prolonged energy crisis.