The conflict has severely disrupted global oil and gas supplies, spiking prices and creating widespread market volatility. The Strait of Hormuz, a vital trade route for about 20% of global oil consumption, has been effectively closed or blocked due to the fighting. Brent crude oil prices have risen sharply from around $70 per barrel before the war to over $100 a barrel, according to multiple reports. This escalation has plunged energy markets into turmoil, with immediate impacts felt across continents.
In Europe, the energy crisis has intensified dramatically, with wholesale gas prices reaching their highest levels since Russia's 2022 invasion of Ukraine. British wholesale gas prices hit 171p a therm, according to market data, creating divisions and frustration among European leaders who are scrambling for short-term solutions reminiscent of the previous energy crisis. Energy-intensive industries in the UK and Europe, including steel and chemicals, are facing severe impacts, with some operations reduced or facing closure. The UK is particularly vulnerable, importing about 70% of its gas and thus highly exposed to price swings.
The widening conflict has disrupted Middle Eastern energy infrastructure and exports across multiple countries. Iran has responded with strikes against energy infrastructure in Gulf countries and tankers in the Strait of Hormuz, through which a fifth of the world's oil and liquefied natural gas typically passes. Since the start of attacks, oil and gas infrastructure in several countries has shut because of damage or as a precaution. Qatar has stopped liquefied natural gas production, Israel has halted production at some gas fields, Saudi Arabia shut its biggest refinery, and output in Iraq has dropped significantly. Critical infrastructure has been damaged, including Qatar's Ras Laffan LNG terminal, with repairs expected to take up to five years, according to experts.
Larijani now plays a decisive role in policymaking.
The Strait of Hormuz blockade has escalated further, with shipping effectively halted and regional governments seeking alternatives. Tankers and container ships are avoiding the strait after insurers cancelled coverage for vessels and global oil and gas shipping rates soared. Concerns increased after Iranian media reported that Iran will fire on any ship trying to pass through the Strait of Hormuz. Citing the Strait of Hormuz disruption, India and Indonesia said they were seeking alternative energy supplies. 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, according to sources.
Oil prices surged about 6% to their highest levels since 2024 on Tuesday, rising for a third session as the war against Iran widened, according to market reports. 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, according to market data. Brent was on track for its highest close since July 2024 and WTI for its highest since January 2025, according to market reports. U.S. gasoline futures climbed about 4% to $2.47 a gallon, their highest since July 2024, according to market data. The war has widened significantly, with Iraq cutting 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.
Global economic fallout is mounting, with growth expected to be lower due to the war and risks of stagflation and potential global recession. Petrochemicals, derived from oil and gas, are embedded in thousands of consumer products, and disruptions are leading to higher prices for items like toys, packaging, and fertilizers. The war has also disrupted fertilizer supplies, with prices up 50% for urea and 20% for ammonia, impacting agriculture globally. Economists warn that supply chain disruptions could have lasting effects on multiple sectors.
The council’s view is central in indirect negotiations with the United States, and that negotiations are taken from this council, word by word.
Governments are responding with emergency measures, though these appear insufficient to replace lost supply. Authorities are releasing emergency oil reserves and taking other steps to ease prices, but the scale of disruption overwhelms these efforts. The EU has reduced its reliance on Russian energy since 2022, with only 2% of oil imports now from Russia, and plans to end all Russian gas imports by next year. This previous diversification has left Europe somewhat better positioned but still vulnerable to the current shock.
The conflict is accelerating shifts in the global energy mix, with a nuclear renaissance emerging alongside increased coal reliance. The war is accelerating a global 'nuclear renaissance,' with countries in Asia and Africa boosting nuclear power generation or planning new reactors, according to experts. Asia and Africa are hit hardest by energy disruptions, leading to increased reliance on coal, Russian oil, and nuclear power. This represents a significant departure from previous decarbonization trends.
Environmental damage and health risks are mounting from conflict-related incidents across the region. The conflict has caused significant environmental damage, including air pollution, oil spills, and health risks from toxic chemicals, with over 400 environmentally concerning incidents recorded, according to experts. These incidents threaten both immediate human health and long-term ecological recovery in affected areas.
Iran’s retaliation has been broader than its previous, mostly symbolic measures, and its approach has resulted in several regional flashpoints posing real risk to supply.
Geopolitical tensions between Iran and the United States remain high, with military buildup continuing despite diplomatic efforts. Heightened tensions exist between Iran and the United States, with indirect talks continuing and President Donald Trump warning that military strikes remain an option if diplomacy fails. Washington has expanded its military presence in the region, according to research sources. The current status of indirect talks and the likelihood of diplomatic resolution remain unclear.
Tehran has prepared contingency plans for war scenarios, including leadership continuity arrangements. 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, according to Iranian officials cited by The New York Times. The 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 New York Times report. The specific details of these contingency plans beyond general continuity structures remain unknown.
Political power struggles within Iran have been revealed by leaked reports about internal maneuvering. Larijani's expanding role has reduced the visible influence of President Masoud Pezeshkian in day-to-day governance, according to The New York Times report. During nationwide protests, Khamenei was the target of an internal effort led by Rouhani to sideline him from crisis management, according to Le Figaro. 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, according to Le Figaro. The effort ultimately failed, partly because Larijani did not support the initiative.
Iran’s attacks on infrastructure could boost oil prices by $10 with Brent going to $90 and up.
Iranian authorities have denied some reports while media handling of sensitive internal information appears cautious. Rouhani's office rejected the Le Figaro account outright, 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. 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.
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, Salar Velayatmadar described Larijani as now playing a decisive role in policymaking. According to www.iranintl.com, Salar Velayatmadar also described the council's view as central in indirect negotiations with the United States, and that negotiations are taken from this council, word by word.
Asian energy markets are experiencing significant disruptions, with refinery operations affected and supply challenges mounting. In China, supply disruptions were causing some refineries to shut or push ahead maintenance plans. U.S.-operated energy assets in Iraq are at risk because they rely heavily on transit through the Strait of Hormuz, according to Standard Chartered analysts. According to virginiabusiness.com, Andrew Lipow described Iran's attacks on infrastructure as potentially boosting oil prices by $10 with Brent going to $90 and up.
Energy trading has become increasingly volatile, with market uncertainty creating both risks and opportunities. Energy traders are facing volatility and logistical challenges, with some making large profits while others incur losses. According to Standard Chartered analysts, Iran's retaliation has been broader than its previous, mostly symbolic measures, and its approach has resulted in several regional flashpoints posing real risk to supply.
Multiple unresolved questions remain about the Strait of Hormuz's future and diplomatic prospects. How long the Strait of Hormuz will remain disrupted and the full impact on global oil and gas supply chains is uncertain. Donald Trump stated that U.S. and Israeli air attacks were projected to last four to five weeks but could go on longer. The U.S. president also said the U.S. was considering oil tanker insurance support.