Oil and gas prices spiked after the Iran war began due to the shutdown of the Strait of Hormuz, according to multiple reports. Brent crude registered its steepest one-month gains and some of the most dramatic daily price fluctuations ever recorded since the conflict started, multiple reports indicate. On Tuesday, oil prices soared about 6% to their highest since 2024, rising for a third session as the conflict widened, disrupting energy shipments from the Middle East and stoking fears of a prolonged conflict, according to research. Brent rose $4.70, or 6.1%, to $82.44 a barrel, and U.S. crude rose $4.43, or 6.2%, to $75.66, with Brent on track for its highest close since July 2024 and WTI for its highest since January 2025, research shows. The International Energy Agency described the loss of 20 million barrels of oil a day as the largest supply disruption in the history of the global oil market.
Iran effectively closed off the Strait of Hormuz, a transit point for a fifth of the world's oil, by threatening tankers. Roughly 15 million barrels of crude oil and 5 million barrels of oil products passed daily through the Strait of Hormuz before the war, about 20% of global oil consumption, the International Energy Agency said. Some oil-producing nations in the Middle East have halted production, taking about 10 million more barrels per day off the market, according to the agency. Tankers and container ships are avoiding the Strait of Hormuz after insurers cancelled coverage for vessels and global oil and gas shipping rates soared, research indicates. Concerns increased after Iranian media reported that Iran will fire on any ship trying to pass through the strait. Iraq has cut production by nearly 1.5 million barrels a day, and cuts could more than double within days as the country runs out of storage space for crude it cannot export due to the crisis, research shows. Since the start of attacks, oil and gas infrastructure in several countries has shut because of damage or as a precaution, including Qatar stopping LNG production, Israel stopping production at some gas fields, Saudi Arabia shutting its biggest refinery, and output in Iraq dropping, according to research.
The knock-on effects of the conflict in the Middle East are awakening ghosts of past crises that shook the European Union, multiple reports indicate. Europe is experiencing deep energy-linked frustration again due to the conflict in the Middle East, threatening to dominate a summit of European leaders, multiple reports show. However, experts say Europe is better prepared for this energy crisis than the last, with wind and solar overtaking fossil fuels in EU power generation last year. The EU now only 2% of its oil imports come from Russia, flowing to Hungary and Slovakia alone, down from an estimated 55% of German natural gas imports before Russia's invasion of Ukraine, multiple reports indicate. The EU plans an end to all Russian gas imports, including LNG, by next year, according to multiple reports. Fuel prices have soared to ruinous levels since the Iran war, with shortages possibly hitting Europe this month according to Shell, multiple reports show. EU officials have begun unwinding key parts of the Green Deal, prioritizing competitiveness over climate costs, multiple reports indicate.
The economic fallout from the Iran conflict is very damaging for energy-intensive companies like Somers Forge, with energy costs rising from a fifth to a higher proportion of manufacturing costs, according to Tammy Inglis, Somers finance director. British wholesale gas prices climbed as high as 171p a therm after the invasion began, up from 78p a therm at the end of February, multiple reports show. The UK imports about 70% of its gas, leaving it vulnerable to price swings, according to multiple reports. Somers Forge's monthly gas bill has soared from £150,000 to as high as £250,000 based on recent prices, Tammy Inglis said. The chemicals sector in Britain has seen production output fall by 60% since 2021, with at least 25 sites closing, blamed on high energy prices, the Chemicals Industry Association reported.
Tankers loaded with crude have U-turned in the Atlantic to divert to Asia, and almost a dozen LNG tankers changed destination from Europe to Asia, multiple reports indicate. Asian countries are turning to coal as the Iran war disrupts oil and gas shipments, with India, South Korea, Indonesia, Thailand, the Philippines, and Vietnam boosting coal use, multiple reports show. China has built record coal power generating capacity since 2021 to improve energy security, according to multiple reports. India is bracing for peak electricity demand of 270 gigawatts and will rely more on coal, with stockpiles for about three months, multiple reports indicate. Citing the Strait of Hormuz, India and Indonesia said they were seeking alternative energy supplies, research shows. In China, supply disruptions were causing some refineries to shut or push ahead maintenance plans, according to research.
Rising oil prices could lead to Russia's war funds being replenished, according to Michael Claesson. Global economic growth could be 0.3 to 0.4 percentage points lower if oil prices average $85 a barrel in 2026, Gita Gopinath, former IMF chief economist, said. Urea prices are up 50% since the war and ammonia 20% due to disruptions in fertilizer exports through the Strait of Hormuz, multiple reports indicate. The International Energy Agency released 400 million barrels of emergency oil reserves, the largest volume in its history, according to multiple reports. U.S. and Israeli attacks on Iran have driven up prices, darkened the economic outlook, and forced developing countries to ration fuel and subsidize energy costs, multiple reports show. U.S. gasoline futures climbed about 4% to $2.47 a gallon, their highest since July 2024, and crack spreads soared to their highest since an unspecified date, research indicates.
The Iran war has unleashed pollutants that threaten agriculture, drinking water, and health, with over 400 environmentally concerning incidents recorded, according to Doug Weir, director of the Conflict and Environment Observatory. Black rain fell near Tehran due to oil infrastructure set ablaze, containing soot, ash, and toxic chemicals, multiple reports show. The exact environmental and health impacts of the pollutants released during the Iran war, and how many people have been affected, remain unknown.
The Iran war has exposed deep vulnerability in the global economy due to dependence on fossil fuels and petrochemicals, multiple reports indicate. Petrochemicals account for 15%-16% of oil demand and are among the fastest-growing uses of oil, according to Fredric Bauer, senior lecturer at Lund University.
Heightened tensions exist between Iran and the United States, with indirect talks ongoing and President Donald Trump warning that military strikes remain an option if diplomacy fails, research shows. The United States has expanded its military presence in the region, according to research.
The New York Times cited Iranian officials as saying Tehran has prepared contingency plans in case of war with the United States or Israel, including scenarios where senior leaders like Supreme Leader Ali Khamenei could be killed. Iran's contingency planning is designed to ensure continuity of the Islamic Republic under extreme circumstances, with senior figures like security chief Larijani, parliament speaker Mohammad Bagher Ghalibaf, and former president Hassan Rouhani named as part of that structure, according to the report. Larijani's expanding role has reduced the visible influence of President Masoud Pezeshkian in day-to-day governance, the report also suggested. 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, research shows. The news outlet Eghtesad24 suggested the New York Times report portrays Larijani as a crisis manager operating across multiple arenas, from nuclear diplomacy to regional strategy and wartime planning, the outlet wrote. What specific contingency plans Iran has prepared for potential war with the U.S. or Israel, beyond general continuity arrangements, is not publicly detailed.
Le Figaro alleged that during nationwide protests, Khamenei was the target of an internal effort led by Rouhani to sideline him from crisis management. According to the French newspaper, Rouhani gathered political figures including former foreign minister Mohammad Javad Zarif, clerics from Qom, and individuals linked to the Revolutionary Guards to discuss an alternative leadership arrangement. Le Figaro said the effort ultimately failed, partly because Larijani did not support the initiative. Rouhani's office rejected Le Figaro's account, describing it as a US-Israeli fabrication aimed at creating doubt and concern in Iranian public opinion. Iranian media widely republished the New York Times and Le Figaro reports but mostly avoided detailed analysis, research shows.
The Swedish Armed Forces Chief warns that a U.S. war in Iran could have consequences for Ukraine. Vitol paid its traders an average of just over $785,000 each in salary and bonuses after the 2022 energy crisis, multiple reports indicate.
Donald Trump's go get your own oil comments sent prices to their highest level since the start of the US-Israel attack on Iran, multiple reports show. U.S.-operated energy assets in Iraq are at risk because they rely heavily on transit through the Strait of Hormuz, according to research.
Iran hit Qatar's Ras Laffan natural gas terminal, wiping out 17% of Qatar's LNG export capacity, with repairs taking up to five years, QatarEnergy said. How long repairs will take for Qatar's Ras Laffan natural gas terminal, and the exact timeline for restoring its full LNG export capacity, remains uncertain.
Saudi oil giant Aramco is attempting to reroute some crude exports to the Red Sea to bypass the Strait of Hormuz where the risk of attacks has slowed shipping to a near halt, sources said. What alternative energy supplies India and Indonesia are seeking, and how quickly they can be secured to mitigate shortages, is not specified. The current status of indirect talks between Iran and the United States, and any prospects for de-escalation, are unclear.