Oil Prices Surge as Iran Conflict Disrupts Supply and Shipping
Oil prices climbed sharply on Thursday, extending recent gains as the widening conflict involving the United States, Israel, and Iran disrupted energy supplies and shipping routes in the Middle East. The escalating tensions have increased fears of supply shortages, pushing crude prices higher.
Brent crude rose $2.92, or 3.59%, to $84.32 per barrel, marking a fifth consecutive session of gains. Meanwhile, U.S. West Texas Intermediate (WTI) crude increased $4.40, or 5.89%, to $79.06 per barrel. During the session, U.S. crude futures surged more than 7%, reaching their highest level since January 2025.
Geopolitical Tensions Drive Oil Market Volatility
The conflict continued to intensify across the region. Reports indicated that missile strikes hit eastern Tehran, while warning sirens sounded in Dubai as the fighting spilled across several countries.
The geopolitical crisis has raised concerns about potential disruptions to global energy flows, especially if key shipping routes are affected.
Analysts warn that crude supplies from Iraq and Kuwait could begin shutting down within days if the Strait of Hormuz remains closed. According to JPMorgan estimates, the conflict could remove as much as 3.3 million barrels per day of supply by the eighth day of the war.
The Strait of Hormuz is one of the world’s most important energy chokepoints, handling around 20% of global oil shipments, making it highly sensitive to geopolitical disruptions.
Production Cuts and LNG Disruptions Add to Supply Concerns
The impact of the conflict is already visible in energy production.
Iraq, the second-largest oil producer within the Organization of the Petroleum Exporting Countries (OPEC), has reportedly reduced output by nearly 1.5 million barrels per day due to storage constraints and limited export routes.
Meanwhile, Qatar, one of the world’s largest exporters of liquefied natural gas (LNG), declared force majeure on gas exports, with sources indicating that a return to normal production could take at least a month.
Attacks on Oil Tankers Increase Shipping Risks
Security risks in the region have also intensified. Attacks on oil tankers in the Gulf continued on Thursday, including a reported explosion near Iraq’s port of Khor al Zubair that damaged the hull of the Bahamas-flagged tanker Sonangol Namibe.
According to market analysts, these incidents — combined with measures by China to limit fuel exports — have contributed to rising oil prices. The refined fuel market is also showing signs of stress as shipments from the Middle East decline.
Several oil refineries in the Middle East, China, and India have reportedly shut down some crude processing units because of supply disruptions caused by the conflict.
Diesel Prices and Shipping Disruptions Rise
With fuel supply expectations tightening, U.S. diesel futures climbed to around $3.54 per gallon, their highest level since January 2023.
Shipping disruptions are also increasing. Data from vessel-tracking firms Vortexa and Kpler showed that nearly 300 oil tankers remained inside the Strait of Hormuz, as traffic through the strategic waterway slowed dramatically after the conflict escalated.
The crisis deepened further when Iran launched a wave of missiles toward Israel, forcing millions of civilians into bomb shelters as the conflict entered its sixth day.
In another escalation, a U.S. submarine reportedly sank an Iranian warship off Sri Lanka, while NATO air defenses intercepted an Iranian ballistic missile targeting Turkey, highlighting the growing regional impact of the conflict.
