The outbreak of open hostilities between the United States, Israel, and Iran on 28 February 2026 has sent shockwaves through global energy markets. As supply routes tighten and geopolitical risk intensifies, the conflict has injected a new wave of volatility into oil and gas prices, suggesting the turbulence may only be beginning.
When U.S. and Israeli forces launched coordinated strikes on Iran on 28 February 2026, energy markets reacted with an immediacy and ferocity that caught many traders off guard.
Brent crude, which had been trading at approximately $70 per barrel in the days prior, vaulted past the psychologically significant $100 threshold within hours of the first reports of hostilities, a level not seen since the early weeks of Russia's invasion of Ukraine in 2022. At its intraday peak, Brent futures climbed as high as $119.50 per barrel before partially retreating.
In total, crude oil prices have risen by approximately 50% since the strikes began on 28 February representing one of the fastest and most severe energy price dislocations in modern market history. To put that in context, it took the Russian invasion of Ukraine several weeks to produce a comparable move.
The central driver of this price shock is not Iran's own oil output, it is geography. The Strait of Hormuz, the narrow waterway separating Iran from the Arabian Peninsula, is the single most critical chokepoint in the global energy system. While Iran's own production accounts for less than 5% of global output, its proximity to the strait gives it outsized leverage, as more than 20% of the world's daily oil demand flows through that narrow passage.
Tehran has been targeting ships in the waterway and striking energy infrastructure across the region, effectively suspending roughly a fifth of global crude oil and natural gas supply.
The region's largest producers, Saudi Arabia, the UAE, Iraq, and Kuwait, have been forced to suspend shipments, with storage facilities in the Gulf rapidly filling and fields being pressured to curtail output as a result.
In total, roughly 9 million barrels per day are currently off the market, a combination of directly damaged facilities and precautionary production cuts.
The disruption is not limited to Iran's borders, and that is precisely what makes this crisis so difficult to contain. Iran struck a major refinery in Saudi Arabia and a liquefied natural gas facility in Qatar, halting flows of refined products and taking approximately 20% of the world's LNG supply offline. For European and Asian buyers who depend heavily on Qatari LNG, the implications are immediate and significant. Alternative supply cannot be sourced and rerouted overnight.
Meanwhile, Kuwait announced a reduction in oil output as a precautionary measure, and Iraq and the UAE are expected to follow. These are not small actors, together, they represent a substantial share of OPEC's total production capacity, and their simultaneous pullback is adding a layer of supply anxiety to markets that are already stretched.
The consequences of this energy shock are no longer abstract market movements, they are showing up directly at the pump. Average U.S. gasoline prices have jumped roughly 50 cents in a single week, climbing from just under $2.98 to $3.45 per gallon according to AAA.
Diesel has fared even worse. Prices have risen by nearly 90 cents in one week, a pace that will rapidly feed through into the broader economy via higher transport and logistics costs. When diesel moves this sharply, grocery prices, manufacturing costs, and delivery surcharges tend to follow with a short lag.
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