Global energy markets are bracing for one of the most significant disruptions in decades following joint military strikes by the United States and Israel on Iran and Tehran’s subsequent retaliatory attacks across the Gulf region, raising concerns over oil supply stability and rising prices.
Analysts warn that escalating hostilities in the Middle East a region responsible for roughly one-fifth of global oil production could trigger sharp market volatility depending on how long the conflict persists and whether critical energy infrastructure becomes a target.
Early market indicators suggest oil prices may surge when trading resumes, as investors react to growing geopolitical risks. Benchmark Brent crude had already climbed to around $70 per barrel in recent weeks, its highest level since August 2025, amid fears of a military confrontation.
Rising Tensions Threaten Energy Supply Routes
The United States and Israel launched coordinated strikes across Iran on Saturday, targeting military and strategic installations.
US President Donald Trump said the operation aimed to eliminate security threats posed by Iran, while signalling that Washington was prepared for prolonged confrontation.
Iran responded with missile and drone attacks across parts of the Gulf, with explosions reported in several countries hosting US military facilities or allied infrastructure.
Although there have been no confirmed reports of direct damage to oil or gas facilities, the conflict has already heightened fears over shipping security in one of the world’s most critical energy corridors.
Particular attention is focused on the Strait of Hormuz, a narrow maritime passage through which nearly 20 million barrels of crude oil and refined products pass daily making it one of the most strategically important energy chokepoints globally.
Industry sources say the threat alone is enough to disrupt oil flows, even without physical damage.
Concerns that tankers could be stranded or targeted have reportedly prompted some energy companies and trading houses to temporarily suspend shipments through the Gulf.
Shipping costs are already rising sharply. Freight rates for very large crude carriers transporting oil from the Middle East to Asia have more than tripled since the beginning of the year, reflecting increased insurance risks and a shrinking number of vessels willing to operate in the region.
Energy traders warn that uncertainty over maritime safety is likely to persist until military tensions ease or stronger security guarantees are established for commercial shipping lanes.
While analysts consider a full blockade of the Strait of Hormuz unlikely, Iran retains the capability to temporarily disrupt traffic through missile strikes, naval harassment or mine-laying operations.
Historically, similar tactics have been used during periods of regional conflict. During the 1980s Iran–Iraq War, attacks on commercial shipping prompted the United States to escort oil tankers through Gulf waters under military protection.
Experts say even short-lived disruptions today could have outsized effects on global prices and supply chains due to the scale of modern energy demand.
Global Supply Buffer Offers Limited Relie
Despite the risks, the global oil market currently benefits from relatively strong supply levels, supported by increased production in the United States, Brazil and Canada.
Saudi Arabia — the world’s largest oil exporter — has also boosted shipments in recent weeks, with exports expected to exceed seven million barrels per day in February, according to shipping analytics data.
Meanwhile, the OPEC+ group is expected to discuss potential output increases during an upcoming meeting as producers attempt to stabilise markets.
However, analysts caution that expanded production elsewhere may not fully offset disruptions if export routes from the Gulf become unsafe.
Market observers say the trajectory of oil prices will largely depend on whether the conflict escalates to include attacks on oilfields, export terminals or processing facilities across the region.
The scale of the US-Israeli strikes and increasingly confrontational rhetoric suggest Washington may be preparing for a sustained campaign aimed at weakening Iran’s leadership.
Even without direct strikes on energy infrastructure, analysts warn the conflict has already introduced a level of uncertainty capable of reshaping global energy markets potentially creating the most severe oil shock in decades.
