oil market

Published on 18/03/2026 – 16:20 GMT+1•Updated
16:25

Brent crude oil prices reached $110 a barrel on Wednesday afternoon, after Iranian state media reported that part of the South Pars gas field, the largest plant in Iran, and the Asaluyeh oil facility were struck by Israel.

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Moreover, the US oil benchmark WTI also rose and is trading at $98 a barrel at the time of writing.

In response to the latest Israeli attacks, the IRGC announced that some Gulf energy sites are once again “legitimate targets”.

The prospect of escalation and prolongation of the conflict in the Middle East, resulting in further destruction of energy infrastructure, and consequently disruption to global markets, has sent oil prices higher once again.

The climb occurs despite other positive news that would normally have a dampening effect on energy markets.

Saudi Arabia confirmed on Wednesday that its biggest oil refinery, Ras Tanura, restarted operations on 13 March.

Additionally, the Trump administration officially announced a 60-day waiver of the Jones Act, a century-old maritime law that restricts the movement of cargo between US ports to vessels that are American-built, American-owned, American-flagged and crewed.

However, in the face of increased tensions and more attacks on oil infrastructure, these potentially mitigating developments have not had any effect in taming prices.

Trump administration confirms Jones Act waiver

The White House Press Secretary, Karoline Leavitt, confirmed the Trump administration’s decision to issue a 60-day waiver of the Jones Act.

The measure lifts the restriction on the movement of cargo between US ports, allowing foreign tankers temporarily and cheaply to transport vital resources such as oil, gas and fertilisers along the US coastline.

In a post on X on Wednesday, Leavitt explained that the decision is “just another step to mitigate the short-term disruptions to the oil market as the US military continues meeting the objectives of Operation Epic Fury.”

The last Jones Act waiver was issued in October 2022 for a tanker supplying Puerto Rico after Hurricane Fiona.

Before that, the Biden administration temporarily eased the law in 2021 for refiner Valero Energy, after a cyberattack crippled a major East Coast fuel pipeline.

Trump renews pressure on allies to secure the Strait of Hormuz

In a separate development, US President Donald Trump has renewed pressure on allies to join a naval escort mission in order to secure the Strait of Hormuz and normalise the circulation of vessels in the region.

In a post on Truth Social, President Trump argued that allied countries need to use the Strait of Hormuz while the US does not, and warned that they could be left managing it on their own in the aftermath of the war.

Since President Trump’s original request, no firm commitments have emerged, but on Monday, the Wall Street Journal reported that the White House plans to announce as early as this week that multiple countries have agreed to join the escort mission.

The report also stated that officials are still deliberating whether such an operation would start before or after the war ends.

After meeting in Brussels, EU foreign ministers discussed extending the bloc’s Aspides naval mission to the Strait of Hormuz, but ultimately declined to participate.

The global energy landscape is facing its most volatile period in decades following the US-Israeli strikes against Iran on 28 February that triggered a wider and potentially prolonged conflict in the Middle East.

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What began as a targeted military operation has rapidly escalated into a direct confrontation with global economic implications.

Based on claims by Iranian state media and regional reports, the Islamic Revolutionary Guard Corps (IRGC) has ostensibly adopted a strategy of “energy blackmail” to leverage the international community into pressuring the US and Israel to cease its attacks.

The $200 per oil barrel threat was first articulated shortly after the conflict began.

On Sunday 1 March, a senior IRGC spokesperson warned that if “cowardly anti-human actions” continued, the world should prepare for a massive price surge, even as high as $200 per oil barrel.

This rhetoric has since become a central pillar of Tehran’s messaging.

As recently as this Wednesday, Ebrahim Zolfaqari, the spokesperson for Iran’s Khatam al-Anbiya military command headquarters, told state media: “Get ready for the oil barrel to be at $200, because the oil price depends on the regional security which you have destabilised.”

Iran’s tactical disruption

The IRGC’s current strategy relies on “internationalising” the cost of the conflict.

By disrupting the flow of nearly 20% of the world’s oil and liquefied natural gas (LNG) through the Strait of Hormuz, Iran aims to drag the global economy into the fray.

This is why the IRGC has targeted vessels from neutral nations, including ships sailing under Thai, Japanese and Marshall Islands flags, among others.

According to energy analysts, this disruption is designed to create domestic political pressure within Western nations, to in turn force the US and Israel to pull back on military action in exchange for energy stability.

By striking countries that have not attacked them directly, Tehran is signaling that no maritime trade is safe as long as the strikes on its soil continue.

The main vector of this strategy is precisely the disruption of energy markets, an element Iran can influence directly through its geographical advantage.

A history of oil price shocks

While $200 per barrel sounds astronomical, oil has approached similar levels in the past when adjusted for inflation.

The highest nominal price ever recorded was around $147 in 2008, driven by peak oil fears and rampant speculation just before the global financial crisis. When adjusted for 2026 inflation, that 2008 peak represents roughly $211 per barrel.

Previous major shocks, such as the 1973-74 Arab Oil Embargo and the 1979 Iranian Revolution, saw prices quadruple and double respectively from pre-crisis levels.

In 1980, prices hit a nominal peak of about $39.50, which would be approximately $160 in today’s terms.

However, the current crisis involves a total physical blockade of one of the world’s most critical maritime chokepoint, increasing the risk of a price “moonshot”.

Market response and reserves

At the time of writing, Brent crude is trading just above $100 per barrel, a sharp increase from the $60 range seen in mid-February before the Iran war began.

The International Energy Agency has attempted to stabilise the market by orchestrating the largest-ever coordinated release of strategic reserves, but the continuation of Iranian strikes agaisnt oil infrastructure and tankers has largely neutralised the effort.

With insurance providers cancelling war-risk coverage and shipping companies redirecting fleets, the market remains in a state of high anxiety.

If the blockade on the Strait of Hormuz persists, the $200 figure may shift from a political threat to an increasingly likely scenario.

In a recent report, Oxford Economics identified $140 per barrel as the threshold at which the global economy tips into mild recession, reducing world GDP by 0.7% by year-end and pushing the UK, the Eurozone and Japan into contraction.

President Trump’s decision to strike Iran creates new risks for a significant chunk of the world’s oil supply.

The Islamic Republic itself pumps about 3.3 million barrels a day, or 3% of global output, making it the fourth-largest producer in OPEC. But the nation wields far greater influence over the world’s energy supplies because of its strategic location.

Iran sits on one side of the Strait of Hormuz, the shipping lane for about a fifth of the world’s crude from key suppliers including Saudi Arabia and Iraq. While the waterway remains open, some oil tankers were avoiding sailing through following the attacks and ships were piling up on either side of the entrance, tracking data compiled by Bloomberg show.

Oil markets are closed for the weekend, and there was no initial information on whether the attacks on Iran and the country’s retaliatory strikes across the region Saturday targeted any energy assets.

Here are the pressure points to watch in oil as events unfold.

Iran’s production

Iran produces about 3.3 million barrels of oil a day, up from less than 2 million barrels a day in 2020 despite continued international sanctions. The country has become more adept at skirting these restrictions, sending about 90% of its exports to China.

The largest oil deposits are Ahvaz and Marun and the West Karun cluster, all in Khuzestan province.

Iran’s main refinery, built at Abadan in 1912, can process more than 500,000 barrels a day. Other key plants include the Bandar Abbas and Persian Gulf Star refineries, which handle crude and condensate, a type of ultra-light oil that’s abundant in Iran. The capital, Tehran, has its own refinery.

For Iran’s overseas shipments, the Kharg Island terminal in the northern Persian Gulf is the main logistical hub. There was an explosion on the island Saturday, according to Iran’s semiofficial Mehr news agency, which didn’t provide details or make any reference to the oil terminal.

Kharg Island has numerous loading berths, jetties, remote mooring points and tens of millions of barrels of crude storage capacity. The facilities have handled export volumes exceeding 2 million barrels a day in recent years.

U.S. sanctions discourage most potential buyers of Iran’s crude, but private Chinese refiners have remained willing customers, provided they get steep discounts. For international shipments, Iran relies on a fleet of aging tankers that mostly sail with their transponders deactivated to avoid detection.

Earlier this month, Iran was rapidly filling tankers at Kharg Island, probably in an effort to get as much crude on the water and move vessels out of harm’s way in case the facility was attacked. It was a move similar to last June ahead of Israeli and U.S. attacks.

Any strike on Kharg Island would be a desperate blow for the country’s economy.

Iran’s main natural gas fields are farther to the south along the Persian Gulf coast. Facilities at Assaluyeh and Bandar Abbas process, transport and ship gas and condensate for domestic use in power generation, heating, petrochemicals and other industries.

The area is the main point for Iran’s condensate exports. During the June war, an attack on a local gas plant sparked jitters among traders, but didn’t cause a lasting spike in oil prices because it didn’t affect any export facilities.

Regional Dangers

Iran’s Supreme Leader Ayatollah Ali Khamenei warned on Feb. 1 of a “regional war” if his country was attacked by the U.S. Tehran has claimed that a full closure of the Strait of Hormuz is within its power.

It would be an extreme step that the country has never taken but remains a nightmare scenario for global markets.

Hormuz is the chokepoint for bulk of the Persian Gulf’s exports of crude and also refined fuels such as diesel and jet fuel. Qatar, one of world’s biggest liquefied natural gas exporters, also relies on the strait. At least three gas tankers going to or from Qatar had paused voyages following the latest attacks in the region, according to ship-tracking data.

A seized South Korean-flagged tanker is escorted by Iranian Revolutionary Guard boats in the Persian Gulf’s Strait of Hormuz in January 2021. If Iran were to close the strait after the U.S.-Israel strikes Saturday, it would likely cause a massive disruption to exports and cause crude prices to spike.

(Tasnim News Agency via AP)

While OPEC members Saudi Arabia and the United Arab Emirates have some ability to reroute their shipments via pipelines that avoid Hormuz, closing the strait would still cause a massive disruption to exports and cause crude prices to spike.

There were signs that other Gulf producers were also accelerating shipments in February. Saudi Arabia’s crude shipments averaged about 7.3 million barrels a day in the first 24 days of the month, the most in almost three years. Combined flows from Iraq, Kuwait and the United Arab Emirates were set to climb almost 600,000 barrels a day from the same period in January, according to data from Vortexa Ltd.

In the past, Tehran has made retaliatory strikes on some of its neighbors’ energy assets. In 2019, Saudi Arabia blamed Tehran for a drone attack on its Abqaiq oil processing facility that halted production equivalent to about 7% of global crude supply.

Many observers say it’s improbable that Iran could keep Hormuz closed for long, making lower-impact actions like harassment of shipping more likely.

During last year’s war on Iran by Israel and the U.S., nearly 1,000 vessels a day were having their GPS signals jammed near Iran’s coast, contributing to one tanker collision. Sea mines are another long-threatened option for deterring shipping.

Market reactions

Oil surged the most in more than three years during the June war, with Brent crude rising above $80 a barrel in London. However, the gains quickly faded once it became clear that key regional oil infrastructure hadn’t been damaged.

Since then, concerns about an oversupply have dominated global markets, with crude in London ending 2025 about 18% lower than where it started.

Despite those fears of a glut, prices have surged 19% this year, partly due to fears of U.S. strikes on Iran.

With the main oil futures closed for the weekend, there’s limited insight into how traders are reacting to the latest attacks. However, a retail trading product, run by IG Group Ltd., was pricing West Texas Intermediate as high as $75.33, a gain of as much as 12% from Friday’s close.

Burkhardt and Di Paola write for Bloomberg. Bloomberg writer Julian Lee contributed to this report.