The price of Brent crude oil, the global benchmark, surged well past $100 when energy markets opened on Sunday. Crude oil was last in the triple digits in 2022, after Russia launched its full-scale invasion of Ukraine.
The average gasoline price in the U.S. has already jumped about 50 cents in a week, from just under $2.98 to $3.45, according to AAA. Patrick de Haan, the petroleum analyst for the app GasBuddy, says gasoline is likely to hit a $4 national average this week.
In the days immediately following the U.S. and Israel's attacks on Iran, traffic quickly came to a near-halt through the Strait of Hormuz, a key waterway through which about 20% of the world's oil and liquified natural gas typically passes. 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 just over $80 by midweek. Then the price hikes began to accelerate, closing at nearly $93 on Friday.
"We have gone from traders with ice in their veins to traders with panic in their veins," Rebecca Babin, an energy trader with CIBC Private Wealth, said Friday.
Prices shot up again when markets reopened after their weekend break, pushing north of $109.
The panic is partly because there is no clear plan for reopening the Strait of Hormuz. After Iran's Revolutionary Guard declared the strait closed and attacked several tankers, shipowners have been hesitant to risk the loss of a ship and crew, and insurance costs for covering the passage have risen sharply. The continued closure of the strait has prompted Iraq and Kuwait to stop production in some fields, because there is nowhere to put the oil those fields would produce.
The U.S. has offered to provide ships with insurance and naval escorts. On Friday, the agency responsible for offering that insurance said it could provide a total of up to $20 billion in coverage, on a rolling basis, to qualifying vessels. But JPMorganChase has estimated the amount of insurance required to cover all the tankers in the Gulf at more than $350 billion.
As for the naval escorts, Neil Roberts, the head of marine and aviation at the influential insurance group Lloyd's Market Association, says that some shipowners are wary. "There seems to be a general view that it might be better to have neutral escorts, rather than the U.S., because the U.S. is a belligerent," he says.
He noted that when the U.S. military escorted ships through the strait in the 1980s during a war between Iran and Iraq, the U.S. was a neutral party.
Additionally, it is increasingly clear that unlike some previous conflicts in the Middle East, this one is not sparing oil and gas infrastructure.
Refineries and LNG facilities in Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates have been targeted in attacks that have largely been blamed on Iran. Over the weekend, meanwhile, Israel struck critical oil facilities in Tehran.
While the closure of the Strait of Hormuz is enormously disruptive, it would also be quick to reverse; once reopened, oil flows could resume as long as all the necessary infrastructure could still operate.
Yet if infrastructure is seriously damaged in the oil-rich countries along the Gulf, it could take much longer for production to normalize even after missile strikes stop.
The world has been, until this crisis, oversupplied with oil. There are some stockpiles, including the U.S. Strategic Petroleum Reserve, which has not yet been tapped. And some oil that was bound for the Strait of Hormuz could be redirected through pipelines — assuming, of course, that those pipelines and other key infrastructure are not attacked. Currently, about 20 million barrels of oil a day are unable to move through the strait, creating a global shortfall.
That deficit could be partly made up, says Kevin Book, the co-founder of the research firm Clearview Energy Partners. "We might be able to use alternate routes and strategic reserves to get all the way down to somewhere between 1 and 3 million barrels per day" of shortfall, he says.
"But," he continues, "that's still an enormous gap."
Copyright 2026 NPR
