Iran has launched a massive retaliatory campaign following joint US-Israeli airstrikes, sending more than 500 ballistic missiles and 2,000 drone strikes at targets in Israel and several Gulf states. A drone strike on a command center in Kuwait has killed six US soldiers, while several missiles have been intercepted near Al Udayd Air Base, the largest US base in the region. Commodity analysts at Standard Chartered have raised their oil price forecasts, noting that unlike last year’s largely symbolic response, Iran’s more expansive approach in the latest conflict has led to several regional incidents that pose a real risk to oil supply flows, including potential contamination affecting assets operated by the United States.
Stanchart now sees Brent crude oil averaging $74 per barrel in the first quarter of 2026, up from its previous forecast of $62 per barrel; Q2 to $67/bbl (from $63/bbl) and 2026 to average $70/bbl (from $63.50/bbl). Analysts add that there is a disproportionate risk to these forecasts if the war escalates and hurts the production of Iran and any regional producers.
Stanchart has identified a significant risk to Iraq’s oil flow due to its heavy reliance on transit through the Strait of Hormuz. Iraq has begun shutting down some major oil fields, such as Rumila, and reducing production at others, such as West Qurna 2, as storage tanks reach capacity.
The Strait of Hormuz remains the largest shock, a waterway used to transport ~31% of oceanic heat and condensate energy. It is mostly destined for China and India, which may turn to Russia for alternative supplies. In addition, it is used to transport 19% of LNG (including all supplies from Qatar), 19% of European supplies of jet fuel and kerosene and 33% of international fertilisers.
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While no barrels have been lost so far, Steinchart notes that the risk to ships from mines or missiles has dramatically increased insurance premiums and supertanker shipping costs. Notably, supertanker freight rates on the TD3 route from the Middle East to China are now over $400,000 a day, more than doubling from February 27, which was already a six-year high. This rate now includes war risk bonuses and hazard pay for crews, with many costs making it uneconomical for most companies.
According to Stanchart, tanker tracking suggests that limited transit on Chinese vessels is directed toward Iran, and this could lead to an increase in onshore crude oil costs – even if flat prices remain – if freight premiums are sustained over the long term and become a structural rather than temporary cost.
