Thick smoke rises from an oil storage facility from the US-Israeli strike late Saturday, Sunday, March 8, 2026, in Tehran, Iran.
Wahid Salemi/AP
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Wahid Salemi/AP
Brent crude, the global benchmark, crossed $100 when energy markets opened on Sunday. Crude oil was last in triple digits after Russia invaded Ukraine in 2022.
According to AAA, the average gasoline price in the US has already jumped nearly 50 cents in a week, from just $2.98 to $3.45. Patrick de Haan, a petroleum analyst with the GasBuddy app, says gasoline is likely to hit the $4 national average this week.
In the days following the US and Israel’s attacks on Iran, traffic quickly increased to a A close-stop through the Strait of HormuzA major waterway that normally passes about 20% of the world’s oil and liquefied natural gas. and oil prices did Rise – but not wildly. At the time, traders calculated that markets could easily absorb a brief disruption. The question was how long the conflict would last.
From $70 before the attack, prices were only $80 by midweek. The price gains then began to accelerate, closing at around $93 on Friday.
“We’ve gone from traders with ice in their veins to traders with fear in their veins,” Rebecca Babin, an energy trader at CIBC Private Wealth, said on Friday.
Prices rose again when markets reopened after a weekend break, pushing north of $109.
There is no clear plan to reopen the Strait of Hormuz. After Iran’s Revolutionary Guard announced the closure of the strait and attacked several tankers, shipowners were reluctant to risk losing ships and crews, and insurance costs to cover the passage rose sharply. The continued closure of the strait has prompted Iraq and Kuwait to halt production in some fields because there is nowhere to put the oil produced by those fields.
The US offered to provide insurance and naval escorts to the ships. On Friday, the agency responsible for issuing that insurance said it could provide a total of $20 billion in coverage on a rolling basis to qualifying ships. But JP MorganChase estimates the amount of insurance needed to cover all tankers in the Gulf at more than $350 billion.
As for naval convoys, some shipowners are wary, says Neil Roberts, head of marine and aviation at the influential insurance group Lloyds Market Association. “There seems to be a general view that it’s better to have neutral convoys rather than the US, because the US is belligerent,” he says.
He noted that during the war between Iran and Iraq in the 1980s, when the US military escorted ships through the strait, the US was a neutral party.
Additionally, it is more obvious Unlike some previous conflicts in the Middle EastThis is Oil and gas does not save infrastructure.
Refineries and LNG facilities in Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates have been targeted in attacks largely blamed on Iran. Over the weekend, meanwhile, Israel Critical oil facilities were hit in Tehran.
Although the closure of the Strait of Hormuz was enormously disruptive, it was quickly reversed; Once reopened, oil flow can resume as long as all necessary infrastructure is still operational.
If infrastructure in oil-rich countries along the Gulf is seriously damaged, it may take longer to normalize production even after the missile attacks stop.
Until this crisis the world was oversupplied with oil. There are some reserves, including the US Strategic Petroleum Reserve, that have yet to be tapped. And some of the oil bound for the Strait of Hormuz could be redirected through pipelines — assuming, of course, that those pipelines and other critical infrastructure aren’t attacked. Currently, about 20 million barrels of oil per day cannot move through the strait, creating a global shortage.
That shortfall can be partially filled, says Kevin Book, co-founder of research firm Clearview Energy Partners. “We will be able to use alternative routes and strategic reserves to get the deficit down to somewhere between 1 and 3 million barrels per day,” he says.
“But,” he continues, “that’s still an enormous gap.”
