The conflict, which has drawn in regional proxies, began a new phase of escalation on October 26 when Israel launched a targeted attack on an Iranian missile production site, killing one civilian and four IRGC soldiers. This followed a massive Iranian aerial assault on October 1, where approximately 180 ballistic missiles were launched at Israel, with many intercepted by a US-led coalition but some striking central and southern Israel and damaging air bases. Israel and the US reprimanded Iran and threatened retaliation, possibly including direct attacks on Iranian oil facilities. The tensions are part of a broader regional conflict; an armed conflict between Israel and Hamas-led Palestinian militant groups has been ongoing in Gaza and Israel since October 7 last year, and Iran's regional proxies, including the Yemeni Houthis and Lebanese Hezbollah, have exchanged missile attacks with Israel, involving it in a multifront battle. Earlier incidents include an alleged Israeli attack on the Iranian consulate in Damascus on April 1, killing 13 people, and Iran's Operation True Promise in April, a massive aerial attack involving over 120 ballistic missiles, 30 cruise missiles, and 170 drones, which saw the US intercept dozens of missiles and drones from bases in Syria, Iraq, Jordan, and Yemen. Subsequent Israeli actions included a limited airstrike on an S-300 air defense facility in Isfahan in April, the assassination of Hamas political leader Ismail Haniyeh in Tehran in July, and the initiation of Operation Northern Arrows, a ground invasion into Lebanon, in September, which included an attack on residential buildings in southern Beirut on September 27 using bunker buster bombs in an attempt to kill Hassan Nasrallah. The US has stationed B-52 Stratofortress bombers and F-15 fighter jets in the region following the Israel-Iran conflict, and Israeli intelligence expects Tehran to launch a counter-attack from Iraq in early November.
Oil markets have experienced extreme volatility as a direct result of the hostilities. The price of oil rocketed past $100 a barrel due to the war, with West Texas Intermediate crude rising above $90 a barrel and Brent crude recently just above $100 a barrel, representing an increase of over 35% since the conflict began; oil prices were between $60 and $70 a barrel a month ago before the conflict began. This surge occurred despite oil prices having fallen more than 10% in the past three months, highlighting the market's sensitivity to specific escalations, such as when Israeli troops moved into Lebanon and Iran launched a missile attack on Israel, causing prices to rise by more than 4% to about $75 a barrel on a recent Tuesday. A critical factor is the Strait of Hormuz, which has remained effectively closed to marine traffic, affecting oil supply; Tehran has significant influence over the strait, handling as many as 20 million barrels a day, almost 30% of world oil trade. The closure has disrupted supply chains, trapping oil in storage facilities across the Middle East. Iran is a major oil producer, supplying about 3 million barrels a day, or 3% of world output, and also exerts control over the Red Sea through backing Houthi rebels in Yemen, who have been targeting shipping. Analysts have noted that closing the Strait of Hormuz could drive oil close to $100 a barrel. However, given Iran's warm relations with Qatar, its supplies might still be allowed through if the strait is restricted. The U.S. Energy Information Administration suggested it could take months before reopening the strait leads to lower energy prices, and if the strait opens by May, oil supplies could return to close to pre-conflict levels in late 2026. Gas prices could start to ease but significant relief depends on negotiations and resumed shipping through the Strait of Hormuz, though gas prices could take months to significantly decline despite falling oil prices.
The aviation industry is facing severe pressure from skyrocketing fuel costs. Jet fuel prices reached $195 at the end of March, up nearly $100 from the end of February when the war began. Airlines are raising baggage fees and fares as jet fuel costs surge, and travel has gotten more expensive in Asia, with airlines adding fuel surcharges or canceling flights. Analysts have described growing scarcity of jet fuel and diesel due to oil losses. Argus Media said the UK is the most exposed country in Europe to tightening diesel and jet fuel supply. Carriers are implementing operational cuts: Ryanair is considering reducing routes due to jet fuel supply risks if the war continues. Lufthansa could ground up to 40 aircraft as part of crisis response plans. Scandinavian Airlines will cut about 1,000 flights due to the surge in jet fuel costs. Vietnam Airlines suspended seven domestic flight routes beginning April 1 and plans to slash flight volume by 10% to 20% a month.
Cruise lines are also vulnerable, facing headwinds as rising oil prices push fuel costs higher amid the Iran war. Analysts warn that Carnival could see the biggest hit to its 2026 profit due to fuel costs. Cruise lines typically hedge against oil price volatility, but Carnival Corp. is an exception. Research indicates a 10% change in fuel cost per metric ton would reduce Carnival's 2026 net income by $156 million, compared to $57 million for Royal Caribbean. Norwegian Cruise Line said a 10% change in fuel cost would cut full-year profit per share by 7 cents, equivalent to roughly a $90 million decrease in net income. In 2022, Carnival's fuel costs were 17.7% of total revenue, compared to 12.1% for Royal Caribbean and 14.2% for Norwegian. Carnival stated its best hedge against fuel costs is to use less fuel, having cut fuel use by 18% since 2011 despite increasing capacity by 38%. Cruise lines face oil price volatility during wave season (January-March), which disproportionately contributes to income.
Specific operational adjustments are being made in response to these cost pressures. Viking Line is adjusting its Helsinki-Stockholm route schedule starting Monday, April 13, with earlier departures and a shorter layover in Stockholm due to rising fuel costs linked to the Iran war. The new schedule will see the ship depart from Helsinki at 5:00 PM, 15 minutes earlier, and arrive in Stockholm at 10:10 AM local time, 10 minutes later, before departing from Stockholm towards Finland at 4:00 PM. The company's financial results show sales for Q4 2025 were EUR 112.6 million, compared to EUR 109.5 million in Q4 2024, while investments in 2025 totaled EUR 19.6 million, mainly in Gabriella and Viking XPRS, compared to EUR 24.6 million in 2024, mainly in Viking Cinderella and Birka Gotland. Viking Line's Board of Directors proposes a dividend of at most 1 euro per share in two instalments, with 50 cents paid in May and the second in September 2026. The Board assesses that profit before tax for 2026 will be on par with or slightly better than 2025, but notes significant uncertainty remains due to economic downturn and geopolitical situation affecting energy prices and emission allowances.
The broader economic impacts are rippling across global supply chains and consumer budgets. Shipping and delivery costs are rising due to fuel surcharges, and grocery prices may increase as higher fuel and fertilizer costs hit agriculture. American consumers feel budget pressure from energy costs due to the U.S.-Israeli war in Iran. However, inflation has cooled across advanced economies, paving the way for interest rate cuts. Many countries moved to diversify energy supplies after the 2022 Russian energy crisis, and Opec+ is expected to stick to plans to raise supply volumes.
Amid this uncertainty, Viking Line is pursuing long-term strategies to mitigate fuel dependency. Viking Line and port partners are making progress on plans to create a fossil-free shipping corridor between Turku and Stockholm by 2035, a project launched in February 2024. Work includes studies into battery installations, energy-saving hull technology, and increased usage of bio-LNG. Viking Line’s dual-fuel ferries bunkered 6,000 metric tons of bio-LNG in 2025, a tenfold increase from 2024, and the company has secured enough bio-LNG to cover 50% of the fuel needs of its LNG-fuelled vessels for the first half of 2026.
In a recent geopolitical development, President Donald Trump, who won 300 electoral votes to become the only second leader to serve non-consecutive tenures, announced a suspension of U.S. attacks on Iran for two weeks. The price of Brent crude oil plunged immediately after Trump's announcement, introducing a new layer of volatility.
The energy market faces prolonged uncertainty, with the timeline for stabilization heavily dependent on the resolution of the Strait of Hormuz closure and the broader conflict.