Global oil markets have entered a volatile phase as tensions linked to the Iran war continue to disrupt production and transport across key energy corridors. Prices are swinging sharply, reflecting uncertainty around supply, political signals, and the risk of further escalation.

Oil prices surged dramatically at the start of the week before reversing just as quickly. Brent crude, the global benchmark, briefly climbed to $119.50 per barrel on Monday—its highest level since the 2022 surge following Russia’s invasion of Ukraine. At the same time, West Texas Intermediate (WTI) touched $119.48 per barrel.

However, markets shifted direction within hours. Prices dropped below $90 after President Donald Trump stated in an interview with CBS News that he believes “the war is very complete.” This sudden reversal highlights how sensitive markets are to political signals.

Even with the pullback, oil remains significantly elevated compared to pre-conflict levels of around $70 per barrel before the U.S. and Israel launched military action against Iran on February 28.

Conflict Expands Across Energy Zones

Instagram | indiatoday | Mojtaba Khamenei’s succession solidifies Iran’s defiance against U.S.-Israeli military pressure.

The war, now in its second week, continues to affect regions central to global oil and gas supply. Iran’s decision to appoint Ayatollah Mojtaba Khamenei as the next supreme leader signals continued resistance amid ongoing strikes by U.S. and Israeli forces.

Energy infrastructure has become a direct target. Oil and gas facilities in Iran, Israel, and areas impacted by U.S. operations have been hit, raising concerns about sustained supply disruption.

Nicholas Mulder, an assistant professor at Cornell University, described the situation as unprecedented. He noted, “In economic terms, this is already the largest oil supply shock ever,” adding that current losses are three to four times higher than those seen during the 1973 and 1979 oil crises.

Strait of Hormuz Near Standstill

One of the most serious developments involves the Strait of Hormuz, a narrow but vital waterway off Iran’s coast. Around 20% of the world’s oil—roughly 15 million barrels per day—normally passes through this route.

Due to fears of missile and drone attacks, tanker traffic has nearly stopped. Oil shipments from major producers such as Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates, and Iran have been severely disrupted.

At the same time, production cuts are increasing. Countries including Iraq, Kuwait, and the UAE are scaling back output as storage capacity reaches its limits.

The conflict has already caused visible damage to key facilities. Oil depots in Tehran were left burning after Israeli strikes. In Bahrain, authorities accused Iran of attacking a desalination plant critical for the drinking water supply.

Bahrain’s national oil company declared force majeure after its refinery complex caught fire. This legal step releases companies from contractual obligations due to extreme circumstances, signaling the severity of the disruption.

Supply Chain Pressure and Risks

Energy experts warn that the situation extends beyond transportation challenges. Jim Burkhard of S&P Global Energy pointed to rising production cuts and storage constraints, noting that restoring output will require complex technical efforts that could take weeks or longer.

There is also concern about future price spikes. Analysts at Macquarie Research suggest that if the Strait of Hormuz remains closed for several weeks, oil prices could climb to $150 per barrel, surpassing the previous peak of around $147 recorded before the 2008 financial crisis.

Still, not all forecasts are as severe. Oxford Economics expects prices to average around $80 per barrel for the quarter but acknowledges that the risk of prolonged disruption has increased.

Governments Weigh Emergency Measures

Rising prices have triggered discussions about releasing emergency oil reserves. The Group of Seven (G7) countries considered the option but decided against immediate action.

French Finance Minister Roland Lescure stated, “We’re not there yet,” while confirming that the group remains ready to take coordinated steps, including strategic stockpiling if needed.

President Trump also downplayed the need to tap into the U.S. Strategic Petroleum Reserve, citing sufficient domestic supply and expectations of falling prices.

Global Ripple Effects on Economies

Instagram | altasworldnews | Lee Jae Myung warned against fuel hoarding as gas lines swell across Southeast Asia.

Higher oil and gas prices are already affecting multiple sectors. Fuel costs for airlines, shipping, and everyday transportation are rising. Household energy bills are also under pressure.

Asian economies look especially vulnerable because of how heavily they depend on imports from the Middle East. Iran alone ships roughly 1.6 million barrels of oil each day, with China taking the largest share. If supply is disrupted, China may need to turn elsewhere, adding further pressure to already tight global markets.

South Korean President Lee Jae Myung has cautioned against price manipulation, calling on refiners and fuel retailers to avoid hoarding. In parts of Southeast Asia, long queues at petrol stations are already signaling rising public anxiety.

The effects go beyond energy. Higher fuel prices often push up overall inflation, raising costs for both businesses and households. That, in turn, can reduce spending—an important driver of major economies like the United States.

Financial markets have already reacted. Stock prices have declined sharply since the conflict began, reflecting investor uncertainty.

Although the U.S. is now a net oil exporter and may be less affected than Europe or Asia, analysts warn that rapid oil price increases have historically contributed to economic downturns.

Rising Fuel Costs for Consumers

American drivers are already feeling the pressure. The average price of regular gasoline reached $3.48 per gallon on Monday, up nearly 50 cents in just one week, according to AAA. Diesel prices, widely used in transportation and shipping, rose to approximately $4.66 per gallon—an increase of more than 80 cents over the same period.

Oil markets remain highly sensitive as the Iran conflict continues to disrupt supply routes and production hubs. Price swings reflect both real shortages and shifting expectations around the war’s trajectory.

While some forecasts suggest temporary disruption, ongoing risks to infrastructure and transport routes point to continued uncertainty. Energy costs are already affecting global economies, and the coming weeks will likely determine whether this shock remains short-lived or develops into a deeper and more sustained crisis.