The ongoing military conflict involving the United States, Israel, and Iran is sending shockwaves through the global energy market, with experts warning that the effects on fuel prices and supply chains could persist for an extended period, even if hostilities cease soon.
Since the war began just over a week ago, global oil prices have climbed by more than 25%. In the United States, this has translated directly to higher costs at the pump, with the average price for a gallon of petrol reaching $3.41 over the weekend—a sharp increase of 43 cents in a single week, according to the American Automobile Association (AAA).
The core of the problem lies in severe physical disruptions to energy infrastructure and shipping, moving beyond mere market anxiety. A key flashpoint is the Strait of Hormuz, a vital waterway through which a substantial portion of the world's oil passes. Iranian actions in the strait have effectively halted shipments from major producers like Saudi Arabia, Iraq, Kuwait, and the UAE, cutting off an estimated 140 million barrels of oil from reaching global refineries. This paralysis has led to a rapid buildup of crude in storage facilities across the Gulf, forcing some countries, including Iraq and Kuwait, to reduce oilfield output.
The disruption isn't limited to oil. Qatar, a critical supplier responsible for 20% of the world's liquefied natural gas (LNG), was forced to declare force majeure on its exports after its facilities were targeted. Similarly, Saudi Aramco's massive Ras Tanura refinery and export terminal has been shut down due to attacks. Energy analysts note that even after a conflict ends, restarting oilfields and damaged facilities is not instantaneous. The process can take days, weeks, or even months, depending on the type of infrastructure and the extent of the damage.
The economic consequences are rippling outwards. With over 80% of global trade transported by sea, the ongoing threats to shipping lanes are expected to drive up freight costs and cause delays for a wide range of goods. This situation poses a particular threat to developing nations. The finance minister of Djibouti warned that smaller countries dependent on maritime trade face being pulled into "deeper economic uncertainty."
For the United States, the timing presents a political challenge for President Donald Trump's administration as midterm elections approach, with voters highly sensitive to energy costs. Economists are also sounding alarms about the potential for "stagflation"—a toxic combination of higher prices and slowing economic growth—as the conflict disrupts supply and fuels uncertainty.
In summary, the war has triggered a tangible energy supply crisis. With a fifth of global crude and gas supply suspended, key infrastructure damaged, and vital shipping lanes compromised, the world faces the prospect of sustained higher energy costs and broader economic instability, the full extent of which will depend on the conflict's duration and the speed of any recovery.
