Oil Prices Jump Nearly 10% as Middle East Conflict Threatens Global
Energy Supplies
How long prices remain high will depend on
what the United States, Israel and Iran do next.
1.
Sharp Surge in Oil Prices:
International oil prices rose nearly 10% on Monday (02.03.2026, briefly
crossing $82 per barrel before settling around $79 — the highest since
January 2025.
2.
Trigger: US–Israel Strikes on Iran:
Military actions by the United States and Israel against Iran
heightened fears of supply disruptions in a key oil-producing region.
3.
Strait of Hormuz Disruption:
Ship traffic through the Strait of Hormuz — through which about 20%
of global oil supply passes daily — dropped sharply, from 65 tankers on
Friday to just six by Sunday afternoon.
4.
Refinery Incident in Saudi Arabia:
A small fire broke out at a Saudi refinery after intercepted drones caused
debris to fall, though the damage appeared limited compared to the 2019
Iran-linked attacks.
5.
Inflation Risks:
Sustained oil price increases could:
o
Raise gasoline prices
o
Increase costs across goods and services
o
Add inflationary pressure
o
Create political challenges for President Donald
Trump
6.
Limited Immediate Pump Impact:
Gasoline prices in the U.S. averaged $2.98 per gallon on Sunday
(01.03.2026). Experts say every $10 rise in oil could increase pump prices by 20–30
cents per gallon, though retail fuel prices typically adjust with a lag of
days or weeks.
7.
Oversupply May Cushion Shock:
Global oil markets were previously in oversupply, which may moderate price
spikes in the short term.
8.
OPEC+ Plans Output Increase:
The OPEC+ group signaled intentions to
modestly raise output, potentially easing supply pressures.
9.
Broader Energy Market Risks:
Liquefied natural gas shipments passing near Iran could also be disrupted,
risking higher electricity and industrial costs globally.
10.
Historical Comparison:
Oil prices jumped about 20% after Russia invaded Ukraine in 2022, but gasoline
prices rose more gradually before peaking months later.
11.
Key Uncertainty:
Analysts say the main factor determining future price movement is whether oil
production facilities suffer major damage. If not, prices could retreat.
Overall
Outlook:
While oil prices have spiked sharply due to
heightened geopolitical risks, the longer-term impact will depend on the scale
and duration of supply disruptions in the Middle East’s critical energy
corridor.
Oil
prices rose nearly 10 percent on Monday (02.03.2026), underscoring the economic
risks of the widening conflict in the Middle East.
The
U.S.-Israeli attacks on Iran could severely restrict supplies from a key oil and
gas-producing region. Even if the disruption is brief, it will almost certainly
make energy more expensive worldwide. The magnitude of those price increases and
how long they last will depend on what the United States and Israel do next — and
how Iran responds.
International
oil prices had already climbed about 20 percent this year. When trading opened on
Sunday, they rose as much as 13 percent, briefly crossing $82 a barrel before retreating
to around $79 a barrel, the highest levels since January 2025.
The
longer that the war disrupts the energy trade, the bigger the risk that consumers
will face higher prices, not just at the gas pump but in a broad array of products,
at a time when many people are already worried about the economy. That could cause
domestic political blowback for President Trump, whose approval ratings have tumbled
in part because many Americans are concerned about inflation.
By
Sunday, the flow of tankers carrying energy products through the Strait of Hormuz,
a narrow waterway off Iran’s southern coast, had slowed to a trickle. About one-fifth
of the world’s oil and a significant amount of natural gas usually pass through
the choke point daily.
A
small fire broke out at a Saudi oil refinery on Monday after two drones that targeted
the facility were intercepted, causing debris to fall, the state-run Saudi Press
Agency reported, citing a military spokesman. The refinery, located in the kingdom’s
eastern region, has a capacity of over half a million barrels of crude oil a day.
The fire initially appeared to be much smaller in scale than an Iran-backed attack
that hit Saudi oil facilities in 2019, briefly knocking out half of the kingdom’s
production capacity.
“The
biggest question is what, if any, oil installations get damaged,” said Amy Myers
Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York
University. “If the answer to that is none, my opinion is the price of oil will
come back down.”
The
United States may be the world’s largest producer of oil and natural gas, but that
does not fully insulate it from market shocks since those commodities are traded
globally.
This
is the second time in two months that the United States has taken military action
in an oil-rich country. Prices barely moved in January after American forces captured
Nicolás Maduro, the president of Venezuela, partly because that country accounts
for less than 1 percent of the world’s oil supply.
Not
only does Iran produce more oil, but so do its neighbors,
and the country sits at the mouth of the Persian Gulf, a vital oil and natural gas
trading route.
Until
this point, one of the main concerns in the global market had been that the world
was producing a lot more oil than it needed. That oversupply is likely to blunt
any increase in prices, at least for a while. Indeed, on Sunday, a group of oil
producers known as OPEC Plus said they planned to increase output modestly in
April.
“Americans
will see some impact at the gasoline pump,” said Jason Bordoff, the founding director
of the Center on Global Energy Policy at Columbia University.
“But even with a massive strike on Iran that killed the leader of the country, at
this point we’re still talking about oil prices that are well within historical
norms — and much less than one would have ever expected with a strike of this magnitude.”
Higher
prices for oil traded on commodity futures markets will not immediately lead to
a big increase in prices at gas pumps in the United States. But fuel prices tend
to respond relatively quickly, within a matter of days or weeks.
The
pace “will really depend on how severe the supply constraint reveals itself to be,”
said Ken Medlock, an energy fellow at Rice University’s Baker Institute.
In
the week after Russia invaded Ukraine in February 2022, oil prices climbed around
20 percent. But the average price of a gallon of regular gasoline only rose about
3 percent in that time, according to AAA motor club data. It was not until the following
week that drivers started to see significantly higher gasoline prices. U.S. gasoline
prices eventually hit a record above $5 a gallon several months later, in June.
As
a general rule of thumb, for every $10 a barrel increase in the cost of oil, the
price of gasoline that consumers see at their local stations might rise 20 to 30
cents a gallon, said Ms. Jaffe of N.Y.U. Gasoline cost an average of $2.98 a gallon
in the United States on Sunday, according to AAA.
The
Russian invasion of Ukraine also drove up the price of natural gas, a key fuel for
the power sector and heavy industry. That contributed to increases in the prices
of electricity in Europe, the United States and elsewhere. A lot of liquefied natural
gas is shipped through the waters around Iran and a sustained disruption of those
flows could, over time, also hurt the global economy.
On
Sunday, attention remained on the Strait of Hormuz, where videos verified by The
New York Times showed a tanker ablaze while anchored near Oman. Another vessel was
also reportedly struck in the area, and a separate projectile was said to have exploded
near a third ship.
In
other conflicts, naval vessels have escorted commercial ships that have come under
threat, though a Department of Defense spokesman said
the United States had no such plans for the Persian Gulf.
As
of Sunday afternoon in Iran, just six tankers used to carry energy products had
traveled through the strait, down from 65 on Friday, according
to S&P Global Energy’s Commodities at Sea.