Oil Prices Surge After US-Israeli Strikes on Iran, Analysts Warn Triple-Digit Crude Could Be Coming

Global oil prices jumped sharply on Monday in the wake of joint United States and Israeli attacks on Iran over the weekend, with some forecasters predicting crude could soon top $100 per barrel. As strikes on regional oil and gas infrastructure escalate and traffic stalls through one of the world’s most critical shipping chokepoints, experts told WIRED that the White House’s management of the conflict over the coming week—alongside responses from Iran and other major oil producers—will be the defining factor in how high prices ultimately climb.

When global markets opened Sunday evening, Brent crude rose to nearly $80 a barrel, a nearly 13% increase from Friday’s closing prices. Tyson Slocum, director of the energy program at progressive think tank Public Citizen, explains that markets have already priced in the risk of an aggressive US stance toward Iran for months, which has buffered prices from an even more extreme sudden jump. But the uncoordinated US aftermath of the initial strike—which killed Iran’s supreme leader Ayatollah Ali Khamenei—has injected far greater uncertainty into global markets.

“Even as Trump claims the US successfully took out Khamenei with full advance knowledge of his location, we clearly failed to neutralize Iran’s full offensive capabilities ahead of the strike,” Slocum said. “It looks like our entire strategy was just eliminate Khamenei, then cross our fingers for a positive outcome.”

Iran controls the Strait of Hormuz, one of the most strategically important shipping routes on the globe. Roughly one in every five barrels of global oil trade passes through the waterway, and most core members of the Organization of the Petroleum Exporting Countries (OPEC)—the world’s dominant oil and gas cartel—depend almost entirely on the strait to move their product out of the Middle East.

“For my entire career working in oil markets, Iranian conflict and a Strait of Hormuz closure has been the ultimate worst-case risk scenario for crude prices,” said Rory Johnston, a Canadian independent oil market researcher. Normally, he explained, OPEC responds to oil-related international crises by ramping up production to offset shortages. “But if all OPEC’s spare emergency production is on the opposite side of the blocked waterway, that extra output doesn’t do much to ease global supply crunches,” Johnston said, comparing the regional oil network to a garden hose where a single kink can cut off flow across the entire line.

Over the weekend, while Iranian officials released conflicting statements about whether the strait would be formally closed to traffic, ship movement through the waterway dropped to nearly zero. Insurance providers have drastically hiked premiums for vessels transiting the strait, and multiple commercial ships have already been targeted in drone strikes. What is unfolding right now is less an official government-ordered closure and more what Johnston calls a “voluntary shutdown” as shipping companies avoid the high risk of the route.

Worse price scenarios than a strait closure could unfold in the coming days. In September 2019, drones struck major oil production facilities east of Saudi Arabia’s capital Riyadh. While Yemen’s Houthi rebel movement publicly claimed responsibility for the attack, US officials blamed Iran. The strike pushed oil prices up 15% in a single day.

On Monday, Saudi officials announced they had shuttered a major domestic refinery following a fresh drone strike, with several other oil and gas fields across the region also taken offline amid attacks. Qatar’s state-owned liquefied natural gas producer Qatar LNG also announced a full production halt Monday due to drone strikes, sending European natural gas prices soaring. Johnston noted that continued, large-scale attacks like these could have an outsized impact on global prices.

“Going back to the garden hose analogy… this would be less a kink and more like taking a gun and blowing the entire faucet apart,” Johnston said.

Clayton Seigle, a senior fellow at Washington DC-based think tank the Center for Strategic and International Studies, agrees with that assessment. “The more desperate and cornered Iran becomes, the greater the likelihood it will use energy as leverage to advance its geopolitical interests,” he said. “If large numbers of tankers abandon Gulf trade entirely, and especially if major oil infrastructure is damaged, we’re very likely to see triple-digit crude prices again.”

Despite the heavy financial support US oil producers have poured into Trump’s reelection campaign, the sector has faced a brutal year of rock-bottom prices and unpredictable federal policy, including trade tariffs. (In January, oil magnate Harold Hamm—a key Trump donor and influencer on the administration’s pro-fossil fuel messaging—announced he would pause shale production in North Dakota for the first time in 30 years, driven by sustained low prices.) The 2022 Russian invasion of Ukraine, which sent oil prices soaring to nearly $130 a barrel, delivered a major financial windfall for US producers. Any similar global market disruption that pushes prices higher will likely benefit US oil companies, as the US is the world’s largest exporter of oil and gas. Still, US producers won’t see immediate stability, Seigle noted: “They’ll want to see how multiyear annual price forecasts may shift before they commit to major changes.”

The White House did not immediately respond to WIRED’s request for comment.

It may seem unusual for a US president to launch an international conflict that drives up oil prices during a midterm election cycle, when energy prices have already been a deeply contentious political issue. Politico reported Sunday that Democratic lawmakers are already drafting their messaging around the strikes and their impact on energy costs, and Slocum says US consumers could see gasoline prices jump as early as this week. Over the long term, products like plastics and fertilizer that rely on fossil fuels as raw inputs could also see cost increases, dragging broader consumer prices higher down the line.

Over the next few weeks, analysts say signals from the White House and regional stakeholders will have an outsize impact on how high oil prices climb. “Will the Iranian government move quickly to end fighting, or gear up for a protracted conflict?” Seigle said. “Will neighboring Gulf states more assertively back the US-Israeli offensive, or even actively join the fight? Will Trump signal a quick wind-down of hostilities, or prepare the public for weeks and months of ongoing war?”

Back in June, oil prices saw a temporary spike after the US bombed Iranian nuclear facilities. This time around, the scale of Iran’s retaliation and the apparent disorganization from the White House could lead to far longer-lasting upward pressure on prices.

“I don’t think Trump has the wherewithal or the stomach for the type of large-scale engagement we’re currently barreling toward,” Johnston said. “But at the end of the day, Trump is the single person that will determine how this goes.”