The International Energy Agency (IEA) has described the loss of 20 million barrels of oil per day as the largest supply disruption in history, with an impact estimated to be 17 times larger than the halt in 2022 following Russia's invasion of Ukraine. Brent crude settled at $105.32 per barrel, up from $70 before the war, while U.S. West Texas Intermediate crude rose to $75.66. The crisis has caused steep one-month gains and dramatic daily fluctuations, with oil prices soaring about 6% on Tuesday alone to their highest since 2024. According to major media reports, the current crisis is reminiscent of the 2022 energy crisis but on a far larger scale.
The global impact on energy markets has been severe, with energy costs rising sharply for consumers and businesses. U.S. gasoline averaged $4.06 per gallon, and gasoline futures jumped around 12% to their highest since September 2023. In the UK, wholesale gas prices reached 171p a therm, the highest since 2022, and manufacturers like Somers Forge have seen monthly gas bills soar from £150,000 to £250,000, according to finance director Tammy Inglis. The war has also increased costs for petrochemical-based products like children's stuffed toys by 10-15%, as reported by Ricardo Venegas, CEO of Aleni Brands. Petrochemicals, used in over 6,000 consumer products according to the U.S. Department of Energy, account for 15%-16% of global oil demand and are a growing driver of fossil fuel use, said Fredric Bauer, senior lecturer at Lund University.
European leaders are panicking over energy prices and scrambling for short-term solutions, according to an anonymous European diplomat cited by BBC News. The EU has reduced Russian oil imports to 2% and plans to end all Russian gas imports by next year, as reported by major media. The IEA released 400 million barrels of emergency oil reserves, and President Donald Trump tapped the Strategic Petroleum Reserve and lifted sanctions on Russian and Iranian crude to stabilize markets.
European leaders are panicking over energy prices and scrambling for short-term solutions.
The war has caused the shutdown of the Strait of Hormuz, a vital trade route for oil and gas, according to major media reports citing 37 sources. About 15 million barrels of crude and 5 million barrels of oil products passed daily through the strait before the war, per the IEA. Tankers and container ships are now avoiding the strait after insurers cancelled coverage, and Iranian media reported that Iran will fire on any ship trying to pass. Saudi oil giant Aramco is attempting to reroute some crude exports to the Red Sea to bypass the strait, according to sources. India and Indonesia said they were seeking alternative energy supplies due to the situation, and in China, supply disruptions were causing some refineries to shut or push ahead maintenance plans.
Production shutdowns and infrastructure damage have compounded the crisis. Iran struck Qatar's Ras Laffan gas terminal, wiping out 17% of its LNG export capacity, with repairs taking up to five years, according to QatarEnergy. Some Middle Eastern oil producers have halted production due to full storage tanks, taking 10 million more barrels per day off the market, per the IEA. Iraq has cut production by nearly 1.5 million barrels a day, and cuts could more than double within days due to storage constraints. Since the start of attacks, oil and gas infrastructure in several countries has shut: Qatar has stopped LNG production, Israel stopped production at some gas fields, Saudi Arabia shut its biggest refinery, and output in Iraq dropped. The war also caused a massive explosion at Valero's Port Arthur refinery in the U.S., according to major media.
The impact on petrochemicals and manufacturing has been significant. The UK chemicals sector has seen production output fall by 60% since 2021, with at least 25 sites closing, according to the Chemicals Industry Association. According to The Guardian, Peter Huntsman, CEO of Huntsman Corporation, said the company may shut its UK facility if high prices persist. Fertilizer prices have risen: urea up 50%, ammonia up 20% since the war began, as reported by major media.
Salar Velayatmadar said Larijani now plays a decisive role in policymaking and that the council’s view is central in indirect negotiations with the United States.
Environmental damage from the conflict has been extensive. According to Kaveh Madani of the UN University and Doug Weir of the Conflict and Environment Observatory, the war has caused black rain from oil fires and pollution from bombed sites. Weir reported that over 400 environmentally concerning incidents related to the war have been recorded.
The war is pushing some African and Asian nations to boost nuclear power generation, according to major media reports citing 16 sources. South Korea is increasing nuclear generation, Taiwan is debating restarting reactors, and Japan has signed a $40 billion reactor deal with the U.S. and a fuel recycling agreement with France.
Iran's internal political dynamics have come under scrutiny. According to The New York Times citing Iranian officials, Iran has prepared contingency plans in case of war with the United States or Israel, including scenarios where senior leaders could be killed. The planning is designed to ensure continuity of the Islamic Republic under extreme circumstances, with senior figures including Larijani, Ghalibaf, and Rouhani named as part of that structure. The Times reported that Larijani’s expanding role has reduced the visible influence of President Masoud Pezeshkian in day-to-day governance. Le Figaro reported that during nationwide protests, Khamenei was the target of an internal effort led by Rouhani to sideline him from crisis management, gathering political figures including Zarif, clerics from Qom, and individuals linked to the Revolutionary Guards to discuss an alternative leadership arrangement. The effort failed partly because Larijani did not support it. However, Rouhani’s office rejected the Le Figaro account as a US-Israeli fabrication. Following the 12-day war with Israel, Khamenei appointed Larijani as secretary of the Supreme National Security Council, despite the Guardian Council previously disqualifying him from running in the presidential election. According to www.iranintl.com, political analyst Salar Velayatmadar said Larijani now plays a decisive role in policymaking and that the council’s view is central in indirect negotiations with the United States. Iranian media widely republished the New York Times and Le Figaro reports but mostly avoided detailed analysis. According to www.iranintl.com, the conservative newspaper Farhikhtegan dismissed the French report as a fictional scenario and a diverse basket of strategic lies. Eghtesad24 suggested the New York Times report portrays Larijani as a crisis manager operating across multiple arenas.
Andrew Lipow said Iran’s attacks on infrastructure could boost oil prices by $10 with Brent going to $90 and up.
Market volatility has led to significant trader losses. According to a trading analyst at a major European energy company, energy traders have faced significant losses due to market volatility. Tankers of crude and LNG have been diverted from Europe to Asia, as reported by major media. Standard Chartered noted that Iran’s retaliation has been broader than previous symbolic measures, resulting in regional flashpoints posing real risk to supply, and that U.S.-operated energy assets in Iraq are at risk because they rely heavily on transit through the Strait of Hormuz. Israel has attacked Lebanon; Iran has responded with strikes against energy infrastructure in Gulf countries and tankers in the Strait of Hormuz. According to virginiabusiness.com, oil market analyst Andrew Lipow said Iran’s attacks on infrastructure could boost oil prices by $10 with Brent going to $90 and up.
President Donald Trump said U.S. and Israeli air attacks were projected to last four to five weeks but could go on longer, and that the U.S. was considering oil tanker insurance support. The IEA released 400 million barrels of emergency oil reserves, and Trump tapped the Strategic Petroleum Reserve and lifted sanctions on Russian and Iranian crude.
Several uncertainties remain. The current Brent crude oil price varies across different reporting dates, with one source reporting $105.32 and another $82.44, likely reflecting different time periods. The duration of the Strait of Hormuz closure and prospects for reopening are unclear. The full extent of environmental damage and recovery time is unknown. Iran's internal political dynamics, particularly regarding Larijani's role and any efforts to sideline Khamenei, remain disputed. How the global energy crisis will affect different regions in the short and long term is still unfolding.