The conflict has disrupted global energy supplies, with the Strait of Hormuz effectively closed to tanker traffic. Tankers and container ships are avoiding the waterway after insurers cancelled coverage; Iranian media reported Iran will fire on any ship trying to pass through. The loss of 20 million barrels of oil per day from the Strait of Hormuz is the largest supply disruption in history, according to the International Energy Agency. Oil prices soared about 6% to their highest since 2024 on Tuesday, rising for a third session as the war against Iran widened. Brent crude rose $4.70, or 6.1%, to $82.44 a barrel; U.S. WTI rose $4.43, or 6.2%, to $75.66. U.S. gasoline futures jumped around 12% to their highest since September 2023, and later climbed about 4% to $2.47 a gallon, reflecting separate price movements.
In response to the crisis, the International Energy Agency released 400 million barrels from emergency reserves to stabilize markets. The US tapped the Strategic Petroleum Reserve and lifted sanctions on Russian and Iranian crude, according to major media reports. According to virginiabusiness.com, President Donald Trump described that 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.
I would shut down our UK facility if high energy prices persist for three more months.
The conflict has caused a 10-15% cost increase for petrochemical-based materials like polyester, affecting toy prices, according to Ricardo Venegas, CEO of Aleni Brands. Petrochemicals are used in over 6,000 consumer products, including toys, cosmetics, and electronics, according to the US Department of Energy.
The war has caused severe environmental damage, including black rain from oil fires and contamination of soil and water, according to Kaveh Madani and Doug Weir. Over 400 environmentally concerning incidents related to the war have been recorded by the Conflict and Environment Observatory, according to Doug Weir.
European leaders are panicking over energy prices and scrambling for short-term solutions, similar to the 2022 crisis.
The conflict has accelerated nuclear power plans in Asia and Africa, with South Korea increasing generation and Taiwan considering reactor restarts, according to major media reports. Japan signed a $40 billion reactor deal with the US and a nuclear fuel recycling agreement with France since the war started, according to major media reports.
European energy prices have spiked, with UK wholesale gas prices reaching 171p per therm, similar to levels after Russia's invasion of Ukraine, according to major media reports. The EU has reduced Russian oil imports to 2%, with only Hungary and Slovakia still receiving Russian oil, according to major media reports. The EU plans to end all Russian gas imports, including LNG, by next year, according to major media reports. Energy-intensive industries in the UK, such as steel and chemicals, are facing severe cost pressures, with Somers Forge's monthly gas bill rising from £150,000 to £250,000, according to Tammy Inglis, Somers Forge finance director. 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 - UK News, Peter Huntsman described that he would shut down its UK facility if high energy prices persist for three more months. According to BBC News, an anonymous European diplomat described that European leaders are panicking over energy prices and scrambling for short-term solutions, similar to the 2022 crisis. The current crisis is estimated to have an impact 17 times larger than the halt in Russian gas supplies in 2022, according to major media reports.
Larijani now plays a decisive role in policymaking and that the council’s view is central in indirect negotiations with the United States.
The war has caused fertilizer prices to rise, with urea up 50% and ammonia up 20% since the conflict began, according to major media reports. Up to 40% of world exports of nitrogen fertilizer pass through the Strait of Hormuz, according to major media reports.
Global economic growth is expected to be 0.3-0.4 percentage points lower if oil prices average $85 per barrel in 2026, according to Gita Gopinath, former IMF chief economist. The war has caused stagflation risks, with higher inflation and lower growth, according to Carmen Reinhart, Harvard Kennedy School.
Iran’s attacks on infrastructure could boost oil prices by $10 with Brent going to $90 and up.
Iran struck Qatar's Ras Laffan natural gas terminal, wiping out 17% of Qatar's LNG export capacity, with repairs taking up to five years, according to QatarEnergy. Iraq has cut production by nearly 1.5 million barrels a day, and cuts could more than double within days due to lack of storage for crude it cannot export, according to research. Qatar has stopped liquefied natural gas production, Israel has stopped production at some gas fields, Saudi Arabia shut its biggest refinery, and output in Iraq has dropped, according to research. Saudi oil giant Aramco is attempting to reroute some crude exports to the Red Sea to bypass the Strait of Hormuz, according to sources.
The conflict has led to a global scramble for energy supplies, with tankers diverted from Europe to Asia, according to major media reports. Commodity trading houses like Vitol, Trafigura, and Glencore are rerouting global energy supplies, with potential for large profits, according to major media reports. India and Indonesia said they were seeking alternative energy supplies due to the Strait of Hormuz situation, according to research. In China, supply disruptions were causing some refineries to shut or push ahead maintenance plans, according to research.
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.
Iran has prepared contingency plans in case of war with the United States or Israel, including scenarios where senior leaders could be killed, according to The New York Times citing Iranian officials. The contingency plans are 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, according to The New York Times. 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 Zarif, clerics from Qom, and individuals linked to the Revolutionary Guards to discuss an alternative leadership arrangement, according to Le Figaro. The effort to sideline Khamenei failed partly because Larijani did not support it, according to Le Figaro. Rouhani’s office rejected the Le Figaro account, describing it 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 research. According to www.iranintl.com, Salar Velayatmadar described that 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 research. According to www.iranintl.com, the conservative newspaper Farhikhtegan described 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, according to research.
Iran’s retaliation has been broader than previous symbolic measures, resulting in regional flashpoints posing real risk to supply, according to analysts at Standard Chartered. U.S.-operated energy assets in Iraq are at risk because they rely heavily on transit through the Strait of Hormuz, according to analysts at Standard Chartered. Israel has attacked Lebanon. Iran has responded with strikes against energy infrastructure in Gulf countries and tankers in the Strait of Hormuz, according to research. According to virginiabusiness.com, Andrew Lipow described that Iran’s attacks on infrastructure could boost oil prices by $10 with Brent going to $90 and up.