Updated March 9, 2026 at 6:19 PM EDT
The price of Brent crude oil, the global benchmark, surged well past $100 when energy markets opened on Sunday. Crude oil was last in the triple digits in 2022, after Russia invaded Ukraine.
Prices settled over the course of the day, retreating back below $90 late Monday afternoon. Stock markets had a similarly volatile Monday, with the Dow Jones Industrial Average falling almost 900 points at one point during the day before rebounding and ending up 239 points.
Analysts, who have cautioned for more than a week that markets in the U.S. and Europe appear to be underpricing the risks of this conflict, continue to warn that oil prices could climb higher if the war continues.
The average gasoline price in the U.S. has already jumped about 50 cents in a week, from just under $2.98 to $3.45, according to AAA. Patrick de Haan, the petroleum analyst for the app GasBuddy, said that if oil remains above $100, gasoline is likely to hit a $4 national average this week. Even if prices stabilize at a lower level, he says gasoline prices would likely continue to climb by several cents. Diesel prices, meanwhile, have seen even more dramatic hikes, rising by nearly 90 cents in one week.
In the days immediately following the U.S. and Israel's attacks on Iran, traffic quickly came to a near-halt through the Strait of Hormuz, a key waterway through which about 20% of the world's oil and liquified natural gas typically passes. And oil prices did rise — but not wildly. At the time, traders calculated that markets could easily absorb a brief disruption. The question was how long the conflict would last.
From $70 before the attack, prices were just over $80 by midweek. Then the price hikes began to accelerate, closing at nearly $93 on Friday.
"We have gone from traders with ice in their veins to traders with panic in their veins," Rebecca Babin, an energy trader with CIBC Private Wealth, said Friday.
Prices shot up again when markets reopened after their weekend break, at one point coming close to $120.
On Monday, the G7 group of advanced economies met to discuss the possibility of releasing oil from their strategic reserves. The International Energy Agency, which was formed in the aftermath of the oil crisis of the 1970s to ensure the world's oil-consuming countries would not be so vulnerable to a similar attack, has urged countries to tap into those stockpiles.
Those conversations appear to have contributed to the calming of oil markets during the day on Monday. However, G7 countries have not yet announced a release of stored crude.
And even if they did, multiple analysts say the world's stockpiles would not be enough to fully close the supply gap created by the Iran war.
"It could have an impact on prices. But it's a small and short term impact," says Amena Bakr, the head of OPEC+ and Middle East Insights at the trade intelligence group Kpler.
Producers could also redirect some oil from the Gulf region, like through a pipeline Saudi Arabia uses to send oil to the Red Sea. But that, too, is only a partial solution.
"The only thing that could really turn this around is the reopening of the Strait of Hormuz," says Bakr.
All eyes on the Strait of Hormuz
After Iran's Revolutionary Guard declared the Strait of Hormuz closed and attacked several tankers, shipowners have been hesitant to risk the loss of ships and crew, and insurance costs for covering the passage have risen sharply. The continued closure of the strait has prompted Iraq, Kuwait and Bahrain to stop production in some fields, because there is nowhere to put the oil those fields would produce.
The U.S. has offered to provide ships with insurance and naval escorts. On Friday, the agency responsible for offering that insurance said it could provide a total of up to $20 billion in coverage, on a rolling basis, to qualifying vessels. But JPMorganChase has estimated the amount of insurance required to cover all the tankers in the Gulf at more than $350 billion.
As for the naval escorts, Neil Roberts, the head of marine and aviation at the influential insurance group Lloyd's Market Association, says that some shipowners are wary. "There seems to be a general view that it might be better to have neutral escorts, rather than the U.S., because the U.S. is a belligerent," he says.
He noted that when the U.S. military escorted ships through the strait in the 1980s during a war between Iran and Iraq, the U.S. was a neutral party.
Attacks on infrastructure
Additionally, it is increasingly clear that unlike some previous conflicts in the Middle East, this one is not sparing oil and gas infrastructure.
Refineries and LNG facilities in Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates have been targeted in attacks that have largely been blamed on Iran. Over the weekend, meanwhile, Israel struck critical oil facilities in Tehran.
While the closure of the Strait of Hormuz is enormously disruptive, it would also be quick to reverse; once reopened, oil flows could resume as long as all the necessary infrastructure could still operate.
Yet if infrastructure is seriously damaged in the oil-rich countries along the Gulf, it could take much longer for production to normalize even after missile strikes stop.
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