Global oil prices rose sharply this week as the war against Iran intensified, raising fears of a long-term disruption to energy supplies from the Middle East.The rise in prices comes a week after the United States and Israel launched major attacks on Iran, escalating tensions into a broader regional conflict.
The ongoing hostilities have disrupted major energy routes and facilities, pushing oil and gas prices higher in global markets.
Oil rises to the highest level since 2023
Oil prices continued their rapid rise on Friday, with US crude settling at $90.90 per barrel, up 36% from last week. During Friday’s session alone, US crude jumped more than 12% to more than $91 per barrel, recording its highest level since late 2022. Since the beginning of the year, the price of US crude has risen by about 60%.
Meanwhile, Brent crude, the international benchmark, topped $94 a barrel, rising more than 9% to its highest level since late 2023. Analysts say the sharp rise reflects growing concerns that war with Iran could lead to a long-term energy supply crisis.
The Strait of Hormuz disrupts oil tankers
The conflict has severely disrupted shipping through the Strait of Hormuz, a vital passage through which much of the world’s oil trade passes.Nearly 20 million barrels of oil usually move daily through the narrow waterway that connects the Arabian Gulf to global markets.
However, several tankers have been stranded in the region amid fears of missile and drone attacks, the Associated Press reported.The conflict has also caused damage to oil and gas facilities across the Middle East, disrupting supply flows. A Wall Street Journal report said that Kuwait “began reducing production in some oil fields after running out of space needed to store bottled crude oil.”Energy infrastructure has been directly affected as the conflict has expanded.Iran has launched retaliatory strikes across the region, including a drone attack on the US Embassy in Saudi Arabia, while also striking a major refinery in Saudi Arabia and a liquefied natural gas facility in Qatar.The attacks halted flows of refined products and temporarily halted about 20% of the world’s liquefied natural gas supplies, according to analysts.Claudio Galimberti, chief economist at Rystad Energy, said the scale of the disruptions was growing.
“We keep seeing news of ships, refineries or pipelines being targeted, so the list is very long,” he added.He said that about 9 million barrels of oil per day are currently off the market due to the closure of facilities or producers taking precautionary steps. “Right now, with all of this shut down, we are in a severe deficit situation,” Galimberti added.
High fuel prices for consumers
High oil prices are already raising fuel costs for consumers and businesses.
In the United States, the price of regular gasoline rose to $3.32 a gallon on Friday, up 11% from the previous week, according to AAA. Diesel prices rose by 15% to $4.33 per gallon during the same period.Energy markets in Europe and Asia, which rely heavily on Middle Eastern supplies, were hit even harder. According to Rystad Energy, diesel prices have doubled in Europe, while jet fuel prices in Asia have risen by about 200% amid supply disruptions.The conflict also shook financial markets. On Friday, the S&P 500 fell more than 1.3%, while the Dow Jones Industrial Average fell 453 points, or 1%. The Nasdaq Composite Index fell 1.6%.All three major indexes are now in negative territory for the year, with the Dow Jones posting its worst week since April 2025 and the S&P 500 having its worst weekly performance since October.
“The problem is that in the oil business…”
Earlier this week, US President Donald Trump said US military operations against Iran could last four to five weeks, but added that the US has “the ability to go much longer.”Trump also appeared to rule out negotiations with Iran unless it agreed to major concessions, saying: “There will be no agreement with Iran except unconditional surrender!”Al Salazar, head of macro oil and gas research at Enverus, warned that the situation could persist for a long time. “The more news we get, the more it looks like this is going to go on for a really long time.”To help stabilize maritime trade, Trump announced a plan to insure losses of up to $20 billion for ships operating in the Gulf region.
The initiative aims to restore confidence among shipping companies and support companies operating in the Middle East region.However, some experts say financial guarantees alone may not solve underlying security concerns.According to the Associated Press, Amy Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University, said shipping companies remain concerned about security threats. “The problem is that in the world of oil trading and oil shipping, people are worried about fighting terrorism.”Jaffe added: “For the United States to be able to create a climate that eliminates the current bottleneck in the Strait of Hormuz, there must be a credible offer of solutions to the counterterrorism problem.”
