Oil traders are bracing for a turbulent Monday morning after a weekend of high-stakes military strikes between the U.S. and Israel on Iran. While markets were physically closed when the latest escalations occurred, the uncertainty surrounding Middle East supply chains is expected to trigger immediate price swings as soon as the opening bell rings.
The primary concern for global markets is whether the conflict will shift from military targets to energy infrastructure. Before this latest round of fighting, analysts suggested that any price spike would likely be short-lived, provided that Iranian pipelines and the critical Kharg Island export terminal remained untouched.
However, the mood is shifting. If tankers are blocked or facilities are damaged, the “war premium” currently baked into oil prices could turn into a long-term surge.
Brent crude, the international standard, had already climbed to a seven-month high of $72.87 (up 2.03) by Friday’s close. That price reflects a market already on edge, but experts warn it may only be the beginning.
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A major variable in this equation is Iran’s role as a global supplier. Iran currently moves about 1.6 million barrels of oil every day. Most of that crude heads to China, where independent refineries operate outside the reach of U.S. sanctions. If those shipments are halted, China would be forced to compete for oil on the open market, an outcome that would almost certainly drive prices higher for everyone else.
The ultimate “wild card” remains the Strait of Hormuz. Roughly 20% of the world’s daily oil supply passes through this narrow waterway, including the bulk of exports from Saudi Arabia, Iraq, and the UAE. While some analysts argue that Iran would be hesitant to close the strait—as doing so would effectively choke off its own revenue and anger its primary buyer, China—the risk of a miscalculation hangs over the shipping industry.
The financial stakes are clear. Research from Rystad Energy suggests that even limited strikes that avoid a full-scale war could push prices up by $5 to $10 on fear alone. However, a more severe disruption of tanker traffic could be far more painful for consumers. Clayton Seigle of the Center for Strategic & International Studies has warned that a wider conflict could push crude oil past $90 a barrel.
For American drivers, this isn’t just a matter of geopolitics; it’s a matter of the wallet. With U.S. gas prices averaging $2.98 per gallon last week, according to AAA, a sustained conflict could easily push costs well above the $3 mark, ending a period of relative stability at the pump.
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