Global energy markets are facing the prospect of one of the most serious shocks in decades following joint U.S. and Israeli strikes on Iran and Tehran’s missile response against targets in Gulf countries. Even the risks and uncertainty surrounding the security of sea lanes are enough to sharply complicate oil exports from a region that accounts for about 20% of global supply.
How large the fallout will be depends largely on how long the confrontation lasts. Still, even without confirmed damage to key infrastructure, the threat to logistics and cargo insurance could significantly affect flows of oil and liquefied natural gas.
Oil prices and market reaction
If there is no quick settlement, the market could respond with a sharp jump in prices as soon as trading opens on Monday. In recent weeks, Brent climbed to around $70 a barrel – the highest level since August 2025 – amid expectations of a military escalation in the Middle East.
The situation is further inflamed by the fact that market participants are pricing in not only actual disruptions, but also the risk of them emerging – above all due to potential complications to shipping and rising transportation costs.
Strikes, explosions, and the state of energy infrastructure
The United States and Israel carried out strikes on Iran on Saturday, saying they were aimed at the leadership. Against this backdrop, U.S. President Donald Trump explained the motives for the operation, linking it to security and domestic political change in Iran.
“the attacks would eliminate a security threat to the United States and give Iranians an opportunity to topple their rulers.”
So far, there have been no confirmed reports of damage to oil or gas infrastructure as a result of Iran’s retaliatory strikes. At the same time, explosions were reported in the United Arab Emirates and Kuwait – two major oil exporters. Qatar, the world’s second-largest exporter of liquefied natural gas, said it intercepted missiles headed toward the country.
There were also reports of explosions in Bahrain and near Iran’s Kharg Island – an export terminal that typically handles about 90% of Iran’s crude exports. Shipping data, however, suggests that in recent days Tehran may have loaded most of the oil stored there onto tankers.
The Strait of Hormuz: the key supply risk
Most importantly, there have so far been no reports of direct disruptions to the passage of vessels through the Strait of Hormuz, a narrow sea corridor between Iran and Oman. Nearly 20 million barrels a day of crude oil and refined products move through it.
But even without visible destruction, the threat alone is enough: the risk that tankers could end up trapped in the Persian Gulf waters north of the strait, or that ships could become targets, is forcing producers, traders, and carriers to rethink routes and schedules. It was previously reported that some major oil companies and trading houses had suspended transits through the strait for several days.
Caution is likely to persist until there is a noticeably greater level of confidence in the safety of sea lanes in the region.
Tanker freight rates rise, fewer ships available
Charter rates for tankers, already climbing amid the escalation, could move even higher. Benchmark rates for very large crude carriers on the Middle East–China route are estimated to have more than tripled since the start of the year. Prices are being driven by two factors at once: rising risks and a shrinking number of vessels willing to enter a dangerous zone.
What will shape what happens next: infrastructure and shipping security
The key questions now are whether the sides will begin striking energy infrastructure and how quickly the U.S. military can guarantee safe shipping routes in the Persian Gulf and the Strait of Hormuz.
Iran is unlikely to be able to sustain a full blockade for long, but it has the capacity to disrupt traffic in the short term. Even time-limited attacks or mining operations can have an outsized impact on prices and physical supply.
Similar scenarios have played out before: during the Iran–Iraq war in the 1980s, commercial shipping and naval vessels were attacked; in 2007–2008, repeated confrontations between Iranian and U.S. forces at sea were recorded; in April 2023, Iran’s navy detained the tanker Advantage Sweet in the Gulf of Oman, and the vessel was released more than a year later.
There are supplies on the market, but routes could cancel out their benefit
Today’s global oil market, overall, looks relatively well supplied: in recent years, production has risen in the United States, Brazil, Canada, and a number of other countries. Saudi Arabia has also increased loadings: oil export volumes were estimated to have exceeded 7 million barrels a day in February – the highest level since April 2023.
OPEC+ countries (OPEC and its allies, including Russia) are expected to agree to an output increase at a meeting on Sunday. At the same time, potential problems with export routes from the Middle East could wipe out a significant share of those additional volumes. Saudi Arabia and the UAE have some alternative supply routes, but they cannot fully replace the critically important sea corridors.
The risk of a widening conflict and the implications for energy supply
The scale of the strikes and Washington’s rhetoric point to readiness for a longer campaign aimed at significantly weakening Iran’s leadership. How threatened Iran’s authorities feel may influence the likelihood of further escalation – with attacks on a broader range of targets in the region, including fields, export terminals, and processing facilities.
Even without the worst-case scenario, the confrontation is already creating conditions for disruptions to energy supplies from the Middle East on a scale the market has not seen in decades. The most sensitive points remain logistics, insurance, and the willingness of the tanker fleet to operate in a higher-risk zone – these factors may determine how quickly the shock turns into a real supply shortfall.
