Extreme surge? What will happen with fuel prices now that the US attacked Iran?

Global oil markets surged sharply after news that Israel and the United States had carried out strikes against Iran, triggering fears of wider disruption across one of the world’s most critical energy regions. How will fuel prices react to the conflict?

Crude oil prices surged almost instantly

Benchmark Brent crude prices jumped by roughly 10–13% within hours of the reports, one of the most dramatic single-day reactions in recent years. According to Bloomberg, prices briefly climbed above USD 78 per barrel before easing back and stabilising around the mid-70 range as markets reassessed the risks.

Analysts say the next moves by Tehran could prove more important than the strikes themselves. As noted by Barron’s, even limited threats to shipping in the Strait of Hormuz — a vital route for global oil flows — could push prices higher by raising tanker insurance costs and slowing deliveries, tightening supply without cutting production. This would also mean that fuel prices can reach new recent highs.

Could Iran’s next move exacerbate the situation?

Iran has never fully closed the strait, largely because doing so would also harm its own exports and key customers such as China, which buys the vast majority of Iranian crude. However, the country has previously detained or harassed vessels in the region, including the British-flagged tanker Stena Impero during tensions in 2019.

Another risk lies with Iran-aligned groups across the region. Yemen’s Houthi forces have demonstrated since 2023 that they can significantly disrupt Red Sea shipping routes that carry roughly 12% of global trade, raising fears that retaliation could widen beyond the immediate conflict zone, driving oil and fuel prices even higher.

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What happens next?

Market forecasts generally outline three scenarios. In the baseline case — limited military escalation without export disruption — oil prices would likely spike temporarily before stabilising as geopolitical risk premiums fade.

A more sustained rally would require a prolonged drop in Iranian exports or damage to regional infrastructure. Analysts at Goldman Sachs estimate that a loss of one million barrels per day of Iranian supply for a year could add about USD 8 per barrel to global prices.

Fuel prices can still reach extreme highs

The most severe scenario involves major disruption to Hormuz shipping. While OPEC+ has some spare capacity, including emergency reserves from Saudi Aramco, experts warn that a broader conflict could still send prices sharply higher.

Energy consultancy Rystad Energy suggests a regional escalation could add USD 10–15 per barrel, while analysts at Tortoise Capital say a worst-case Hormuz disruption could push oil above USD 100.

Featured image is illustration. Source: depositphotos.com