Oil prices have surged due to Middle East conflicts involving Iran, Saudi Arabia, and Kuwait. Attacks on oil facilities, such as in Iran's South Pars field and Saudi Arabia's Yanbu refinery, are cited as causes of the price surge. Oil prices have surged to over $110 per barrel, according to analysts. The exact current oil price figures and which sources are most accurate remain unclear, as contradictions exist: Brent crude futures jumped 13% to above $82 per barrel before paring back to $79, according to analysts, while other reports suggest Brent reached up to $118 per barrel. Similarly, WTI crude oil reached around $98 per barrel, but US West Texas Intermediate crude futures rose over 8% to around $72 per barrel, analysts indicate.
The conflict began early Saturday morning with US and Israeli air strikes into Iran, according to reports. President Trump stated the air strikes aimed to destroy Iran's nuclear program and potentially remove the regime. President Trump reported that Iranian Supreme Leader Ali Khamenei was killed, though verification and details regarding this report are pending. Iran retaliated with missile strikes against US military assets and civilian and energy infrastructure in Gulf states like Bahrain and the UAE, reports show.
Strikes also hit oil tankers in the Strait of Hormuz, a critical chokepoint for roughly a fifth of the world's oil supply. About 15 million barrels per day of oil cross the Strait of Hormuz, according to Kpler data. Analysts told Yahoo Finance that pipelines could absorb 5 million to 7 million bpd, leaving roughly 8 million bpd stranded if oil is diverted. Analysts noted Iran has never fully closed the waterway and called it effectively impossible, but any disruption would add risk and shipping premiums. Reuters reported that several oil majors and trading houses suspended shipments through the Strait of Hormuz. Kpler satellite imagery indicated traffic in the Strait of Hormuz has all but frozen. Iran's Islamic Revolutionary Guard Corps instructed vessels via radio that 'no ship is allowed to pass' through the Strait of Hormuz, with the timeline and likelihood of reopening uncertain.
No ship is allowed to pass.
Broader oil market movements show WTI crude oil reached around $98 per barrel. Analysts indicate Brent reached levels not seen since January 2025, while WTI reached levels not seen since 2025's '12-day war' between Israel and Iran. Brent crude futures jumped 13% to above $82 per barrel before paring back to $79, according to analysts. Experts predict oil could rise to $180 per barrel if conflicts persist until April. The full extent of damage to oil facilities and infrastructure in the Middle East is not yet known.
Economic consequences for the U.S. include that sustained high oil prices around $100 per barrel could reduce U.S. GDP growth by 0.25-0.5 percentage points and increase inflation by 0.25-0.5 percentage points, according to a Financial Times/Chicago Booth survey. Low-income households are disproportionately affected by higher energy prices, which act like a regressive tax. The U.S. economy grew modestly at 0.7% in Q4 2025. The situation may delay interest rate cuts until at least spring 2027.
Additional economic and market effects include that the situation could worsen food prices due to impacts on agricultural inputs. Gold increased by more than 3% to cross $5,400 per ounce as investors sought safety, analysts report. Shares in Saudi Aramco rose by more than 3% in Middle Eastern trading, according to reports. The specific economic impacts on different countries and regions beyond the U.S. are not fully detailed.