Crude Oil Price Faces Prolonged Shock as Iran War Risks Energy Supply Ahead of Midterms
The crude oil price is being driven sharply higher as the United States-Israeli war on Iran has suspended about a fifth of global crude oil and natural gas supply, raising the prospect of weeks or months of elevated fuel costs for households and businesses.
What Happens to the Crude Oil Price?
Global oil prices have climbed by more than 25% since the start of the conflict, feeding higher pump prices for consumers worldwide. The American Automobile Association (AAA) shows the national average petrol price rose to $3. 41 per gallon, an increase of $0. 43 over the previous week. US crude oil settled just below $91 per barrel at the end of a trading week that marked the largest weekly gain in records dating back to 1983. Goldman Sachs has warned prices could surpass $100 per barrel if shipping disruptions persist.
Market participants are shifting from treating the situation as pure geopolitical risk to confronting tangible operational disruption: refinery shutdowns, export constraints, and bottled-up storage in the Gulf are already affecting processing and regional flows. That practical impairment, combined with direct attacks on shipping and energy infrastructure in the Strait of Hormuz, is the core channel pushing the crude oil price higher.
What If Disruptions Persist? (Three Scenarios)
- Best case: Shipping routes and facilities resume normal operations within days; storage pressure eases as shipments restart, limiting the price rise and allowing pump prices to stabilise.
- Most likely: Logistical and operational setbacks take weeks to address; shut-in oilfields in Iraq and Kuwait remain offline while UAE curtails shipments, maintaining elevated global prices and sustained upward pressure on gasoline, diesel and jet fuel.
- Most challenging: A near-complete shutdown of the Strait of Hormuz endures, forcing prolonged cuts across major Gulf producers equivalent to roughly 140 million barrels withheld from refiners and extending supply shortfalls for months; higher freight costs and regional inflationary spillovers follow.
What Can Stakeholders Do Now?
Governments and companies face constrained choices. Energy storage levels in the Gulf are rapidly filling, prompting production cuts in some fields; Amir Zaman, head of the Americas commercial team at Rystad Energy, notes that fields forced to shut in may take days, weeks or months to return to previous output depending on their type and condition. Policymakers sensitive to consumer pain face political risk: the conflict creates a domestic vulnerability for the US president ahead of the midterm cycle.
For consumers, price pressure is visible at the pump. GasBuddy data show an overnight station price move of $0. 30 per gallon in one New York City example, with GasBuddy’s Patrick De Haan projecting US gasoline averages could reach $3. 50 to $3. 65 per gallon in the near term and noting that $4 per gallon is now plausible. Small and developing states reliant on maritime trade are at particular risk; Ilyas M. Dawaleh, Djibouti’s finance minister, warned the fighting would bring severe economic consequences for such countries. Egypt’s President Abdel Fattah el-Sisi described his country’s economy as in a state of near-emergency, highlighting the inflationary channel already affecting regional economies.
Operationally, refiners and shippers should prioritise contingency logistics, alternate routing where possible, and clear communications on restart timelines. Oil buyers and physical traders will need to build flexibility into contracts and insurance arrangements as freight costs rise—more than 80% of global trade moves by sea, the World Bank, amplifying the knock-on effects of maritime disruption.
The immediate picture is clear: tangible damage to facilities, constrained exports and shipping risks are already lifting the crude oil price and feeding higher pump prices. Expect volatility to persist until shipping routes and Gulf production can be reliably restored; plan accordingly and recognise that operational recovery timelines—not just ceasefires—will dictate how long prices remain elevated at the pump and in markets for weeks or months of disrupted supply, affecting consumers, businesses and policymakers alike. crude oil price
