Oil Surges Past $100 as Iran War Escalates
Rising crude prices signal growing supply disruptions and renewed inflation risks for the global economy
Global oil prices climbed above $100 per barrel for the first time since 2022 on Sunday as the expanding conflict involving Iran rattled energy markets and threatened a key global shipping route.
The international benchmark Brent crude climbed 13% Sunday and traded at nearly $102.
West Texas Intermediate (WTI) — the main U.S. benchmark — umped 18.98%, or $17.25, to $108.15 per barrel.
The surge marks a more than 30% increase in crude prices since military strikes against Iran began.
Sunday opening calls: Crude oil up $16 in early trade on Iran war. Stock market down 1 to 2%. Dollar up about 1/2%. Beans indicated 5 to 10 higher. Corn called 1 to 3 higher. Wheat 3 to 5 higher in nervous war trade.
Strait of Hormuz disruption drives market fears. The primary driver behind the spike is growing concern about shipping disruptions in the Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world’s oil supply normally flows.
War-risk premiums and escalating security concerns are reportedly keeping some tankers away from the region, tightening global supply and pushing prices sharply higher. Energy analysts warn that further disruptions to production or exports across the Persian Gulf could intensify the market shock.
Barclays analyst Amarpreet Singh said early shutdowns of production in Iraq and Kuwait are already occurring and could spread to the United Arab Emirates and Saudi Arabia if the conflict escalates further.
Kuwait, the fifth-biggest producer in OPEC, announced precautionary cuts Saturday to its oil production and refinery output due to “Iranian threats against safe passage of ships through the Strait of Hormuz.” The state-owned Kuwait Petroleum Corporation did not detail the size of the cuts.
Output in Iraq, the second-biggest OPEC producer, has effectively collapsed. Production from its three main southern oilfields has fallen 70% to 1.3 million barrels per day, three industry officials told Reuters Sunday. Those fields produced 4.3 million bpd before Iran war.
And the United Arab Emirates, the third-biggest producer in OPEC, said Saturday that it is “carefully managing offshore production levels to address storage requirements.” The Abu Dhabi National Oil Company (ADNOC) said its onshore operations are continuing normally.
Gasoline prices rising quickly in the United States. Higher crude prices are already flowing through to consumers. The average U.S. gasoline price climbed to about $3.45 per gallon, up from roughly $3.00 before the strikes, according to AAA tracking. Diesel has become 83 cents more expensive.
If crude remains above $100, analysts expect pump prices to continue climbing in the coming weeks — a politically sensitive development for President Donald Trump, who has frequently highlighted lower gasoline prices as a policy achievement.
White House scrambling for options. The administration is exploring several measures to stabilize energy markets, though options appear limited.
Officials are considering naval escorts for tankers transiting the Strait of Hormuz, while the U.S. International Development Finance Corporation has offered political-risk insurance and guarantees to encourage shipping companies to continue operating in the region.
The Treasury Department also issued a 30-day sanctions waiver allowing Indian refiners to purchase additional Russian crude, an effort aimed at easing supply pressure in global markets.
Energy Secretary Chris Wright defended the temporary price surge during an appearance on Fox News Sunday, arguing the increase is “a small price to pay” if the conflict ultimately restores stability to energy markets. “We’re not loo long away before you’ll see more regular resumption of ship traffic through the Straits of Hormuz,” Wright told CNN in an interview. “We’re nowhere near normal traffic right now. That will take some time. But again, worst case that’s a few weeks, that’s not months.”
Political pressure builds in Washington. Democrats are already urging the administration to use the Strategic Petroleum Reserve (SPR) to counter rising fuel prices. Senate Minority Leader Chuck Schumer (D-N.Y.) called on the White House Sunday to release crude from the emergency stockpile. Republicans, however, have generally resisted such moves, arguing that previous releases during the Biden administration were politically motivated.
Prices could rise further. Despite the sharp spike, current gasoline prices remain well below the 2022 peak when U.S. fuel briefly topped $5 per gallon after Russia’s invasion of Ukraine. Still, analysts warn the situation could worsen quickly if disruptions in the Gulf deepen.
Barclays estimates Brent crude could approach $120 per barrel if the conflict persists and shipping through the Strait of Hormuz remains constrained — a scenario that could significantly increase global inflation pressures and energy costs.
Bottom Line: What began as a regional conflict is now reverberating through global energy markets, with oil prices back above $100 and the risk of further supply disruptions looming.
