Oil Prices Surge 13% in First Trades After -Iran Conflict
Oil prices have surged 13% in the first trades following the start of the US-Iran conflict, sending shockwaves across global energy markets and raising fresh concerns about supply disruptions in the Middle East.
As tensions escalated between Iran and the combined forces of the United States and Israel, traders reacted quickly, pushing benchmark crude prices to multi-month highs.
Brent Crude Reaches Highest Level Since January 2025
Brent crude, one of the key global benchmarks used to determine oil prices, climbed as high as $82.37 per barrel in early trading — its highest level since January 2025.
Although prices later eased to $79.86 per barrel, Brent still remained:
• 9.5% higher than its Feb 27 close
• Around 30% higher since the start of 2026
The sharp rise reflects growing investor fears that oil exports from the region could be disrupted as the conflict intensifies.
Meanwhile, the US benchmark West Texas Intermediate crude rose 6.95% to $71.68 after earlier touching $75.33, its highest level since June 2025.
Strait of Hormuz at the Center of Supply Concerns
The Strait of Hormuz — a critical maritime chokepoint linking the Persian Gulf to the Indian Ocean — is at the heart of the market’s reaction.
This narrow waterway handles:
• Approximately 15 million barrels of crude oil per day
• Around 290 million cubic meters of liquefied natural gas (LNG) daily
• Roughly one-fifth of the world’s oil supply
Any disruption in this region can have a significant impact on global energy prices.
Although Iranian authorities have stated they do not intend to shut the strait, tanker traffic has largely slowed since the conflict began on Feb 28. Insurers have warned shipowners about potential policy cancellations and higher premiums for vessels operating in the region.
The UK Maritime Trade Operations Centre also reported multiple incidents of vessels being struck by “unknown projectiles” near the Strait since March 1.
Ships in the area have reportedly received radio messages claiming that transit through Hormuz was banned, despite no official closure being announced.
Analysts Warn of Further Oil Price Volatility
Energy analysts believe crude prices may remain elevated as long as the US-Iran conflict continues.
Max Layton, global head of commodities research at Citibank, expects Brent to trade between $80 and $90 per barrel in the coming week if tensions persist. In the event of a prolonged conflict, prices could surge to $120 per barrel.
He noted that even without an official shutdown, risk aversion among shippers is already visible, with vessels parking outside the Strait and transit volumes declining.
Recent attacks on the Omani tanker Skylight and the UAE’s Abu Al Bukhoosh offshore platform have further heightened concerns about the vulnerability of regional oil infrastructure.
Stephen Innes, managing partner at SPI Asset Management, explained that speculative positioning had been building for weeks in anticipation of escalating tensions.
He noted that when a crowded trade finally gets the expected headline, prices typically move sharply higher before potential profit-taking. However, in conflict-driven markets, oil prices rarely move in straight lines.
OPEC+ Increases Production but Markets Remain Nervous
On March 1, OPEC+ — which includes major oil exporters such as Saudi Arabia, the UAE, and Russia — announced it would raise crude oil production by 206,000 barrels per day in April.
Although this increase is larger than the 137,000-barrel adjustments made in December, analysts believe it is unlikely to calm markets in the short term.
According to Jorge Leon of Rystad Energy, the market’s main concern is not production capacity but whether oil can safely move through export routes.
If flows through the Gulf are constrained, additional production will provide limited immediate relief, he said.
LNG Supply at Risk if Hormuz Is Disrupted
The situation is equally serious for the LNG market.
Rystad Energy estimates that a complete closure of the Strait of Hormuz could remove:
• 97.7 million tonnes of LNG annually
• Equivalent to 363.8 million cubic meters per day
• Around 22% of global LNG supply
This would mainly impact exports from Qatar, the UAE, and Oman — key suppliers to Asia and Europe.
For energy-importing nations, this could translate into higher electricity costs and increased inflationary pressure.
Implications for Global Economies
The surge in oil prices highlights how sensitive global markets remain to geopolitical shocks in the Middle East.
If the US-Iran conflict escalates further, investors and businesses should prepare for:
• Continued oil price volatility
• Rising fuel costs
• Higher LNG prices
• Increased inflationary pressure
• Market uncertainty in energy-dependent economies
In the coming weeks, monitoring developments in the Strait of Hormuz will be critical for investors, policymakers, and global businesses alike.
