Oil surged as the first impacts of the war in the Middle East began to be felt, with a near halt to traffic through the Strait of Hormuz and disruption at a big refinery in Saudi Arabia upending energy markets.Brent futures settled about 6.7% higher to settle near $78 a barrel, the biggest gain since June 2025. The commodity extended gains post-settlement after a spokesperson for Iran’s Islamic Revolutionary Guard Corps said the country won’t let oil leave the region, according to state media. Diesel futures – the engine of the global economy – settled at the highest in nearly four years.
The US sent conflicting messages about how long a war with Iran might last as airstrikes continued for a third day, with prolonged fighting poised to further roil energy markets and snarl vital shipping lanes. US President Donald Trump said the conflict is projected to last four to five weeks, but added that the US is prepared to fight longer. US Defense Secretary Pete Hegseth, for his part, rejected the idea of an “endless” war.
The Islamic Republic’s security chief, meanwhile, ruled out negotiations.The war marks a dangerous new phase for the Middle East and the global oil market. Iran pumps about 3.3 million barrels a day, or 3% of global output, but it wields greater influence over energy supplies given its location alongside the Strait of Hormuz. Oil from the Persian Gulf must pass through the waterway to get to major markets such as China, India and Japan. The chokepoint handles a fifth of the world’s oil and a similar portion of liquefied natural gas.”In a prolonged conflict scenario, we see oil prices reaching into the $100s per barrel,” Helima Croft, head of commodity markets strategy at RBC Capital LLC, said in a note. “Energy is now clearly in the crosshairs of the Iran war.”
JPMorgan Chase & Co. estimates that a halt in Hormuz lasting 25 days would fill producer nations’ storage tanks, forcing them to cut production. Insurance markets are already scrambling to work out how to price the risk.
The jump in energy costs – if maintained – risks boosting inflationary pressures around the world. That stands to complicate the task facing central bankers including the US Federal Reserve as they seek to manage the pace of price gains, while also supporting growth and employment.
In one of the first big impacts on physical oil assets, Saudi Aramco halted operations at its Ras Tanura refinery after a drone strike in the area, according to people familiar with the matter, adding to a spike in fuel prices. Crude flows from the nearby port continued.
In Europe, LNG surged on Monday after Qatar halted output at the world’s largest export plant following an Iranian drone attack.
A US flagged oil tanker that operates as part of a military fuel supply program was hit in the region, while at least four vessels were targeted on Sunday. Naval forces described the threat as “critical” and swaths of shipowners aren’t transiting. Trump, meanwhile, said US forces “knocked out” ten Iranian naval ships.