Global energy markets have been hit by one of the most serious shocks in decades following joint U.S. and Israeli strikes on Iran and, in response, Tehran’s missile attacks on targets in Persian Gulf countries. As tensions rise, the risks to oil exports from a region that supplies roughly 20% of global deliveries are increasing.
How severe the disruption becomes will depend primarily on how long the fighting lasts. But even without confirmed large-scale damage, the threats and uncertainty alone are already forcing the market to price in higher risk – both in crude prices and in logistics.
Oil prices could surge sharply
If the conflict is not brought under control quickly, notable price spikes are expected when trading opens on Monday. Benchmark Brent crude has climbed to around $70 a barrel in recent weeks – its highest level since August 2025 – as investors braced for a potential military escalation in the Middle East.
Strikes on Iran and the missile response: what we know now
On Saturday, the United States and Israel carried out strikes on Iran. The targets were said to include senior leaders, and the developments triggered a further widening of the conflict in the region. U.S. President Donald Trump said the attacks were intended to eliminate a security threat to the United States and give Iranians a chance to overthrow their rulers.
“The attacks would eliminate a security threat to the United States and give Iranians an opportunity to topple their rulers.”
As of now, there has been no confirmation of damage to oil and gas infrastructure as a result of Iranian 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 aimed at the country.
Explosions were also reported in Bahrain and near Iran’s Kharg Island – an export terminal through which about 90% of Iran’s crude oil exports typically pass. However, shipping data indicate that in recent days Tehran may have moved most of the oil stored there out on tankers.
The Strait of Hormuz: the key risk chokepoint
Crucially, there have so far been no reports of a halt to shipping through the Strait of Hormuz – a narrow sea corridor between Iran and Oman through which nearly 20 million barrels of crude oil and refined products pass each day.
But even without physical damage, the situation remains dangerous for the market. The mere risk that tankers could end up “trapped” in the Gulf north of Hormuz – or become targets – is already pushing producers, traders, and carriers to rethink routes and schedules. Reports said some major oil companies and trading houses have suspended transits through the strait for several days.
Caution is unlikely to fade until there is far greater confidence in the safety of maritime routes. Against this backdrop, tanker freight rates – which had already been rising amid tensions – could climb even higher. Benchmark rates for very large crude carriers (VLCCs) on the Middle East–China route have more than tripled since the start of the year, reflecting both higher risk and a shrinking number of vessels willing to operate in the threat zone.
Could the strait be closed – and what would it mean
The key questions in the coming days are whether energy infrastructure will become a direct target and how quickly the U.S. military can ensure safe navigation in the Persian Gulf and the Strait of Hormuz.
While Iran is unlikely to sustain a prolonged blockade, it does have options to disrupt traffic temporarily. Even brief attacks or mining operations could have an outsized effect on prices and the availability of supplies. The United States would likely respond quickly, but markets typically react painfully even to short-lived disruptions in such a strategic corridor.
Historical parallels and today’s conditions
Similar threats to shipping in the region have emerged before. During the Iran–Iraq War in the 1980s, Iran attacked commercial vessels and U.S. Navy ships, after which President Ronald Reagan deployed American forces to escort tankers. Renewed clashes between Iranian and U.S. naval forces were also recorded in late 2007 and early 2008. In April 2023, Iran’s navy seized the tanker Advantage Sweet in the Gulf of Oman, which had been chartered by Chevron; the vessel was released more than a year later.
Stocks and production outside the region do not guarantee calm
Today’s global oil market generally looks better supplied than in some past periods, as production has increased in the United States, Brazil, Canada, and other countries in recent years. At the same time, risks in the Middle East could quickly wipe out part of that “buffer” if export routes begin to operate intermittently.
Saudi Arabia, the world’s largest oil exporter, has increased shipments in recent days. They are expected to exceed 7 million barrels a day in February – the highest level since April 2023. It is also expected that OPEC+ (OPEC countries and allies, including Russia) will agree to boost output at Sunday’s meeting.
Still, even additional production may not fully offset the risks if supplies from the region run into logistical constraints. Saudi Arabia and the UAE have some alternative routes, but they do not remove the main bottleneck – the security of sea lanes in the Persian Gulf.
What could become the turning point
The scale of the U.S. and Israeli strikes, as well as Washington’s rhetoric, may point to preparations for a longer military campaign aimed at significantly weakening Iran’s leadership. How threatened Iran’s leaders feel could determine the next level of escalation – particularly whether attacks expand to a wider range of targets in the region, including oil fields, export terminals, and refining capacity.
Even without the worst-case scenarios materializing, the current escalation already creates the risk of major disruptions to oil and LNG supplies from the Middle East – disruptions the global market has not felt for many years.
