Oil Price Uncertainty

Since the launch of the joint operation by Israel and the United States against Iran. Oil prices have experienced severe volatility in a relatively short period. The offensive, dubbed by the Pentagon as “Operation Epic Fury,” began on February 28, 2026. It started with a barrage of coordinated airstrikes by both American and Israeli forces in an effort to destroy Iran’s nuclear capabilities and missile facilities. These strikes also targeted and eliminated several key members of Iran’s leadership, including the late Supreme Leader Ali Khamenei. Who was killed by airstrikes on the first day of the conflict. The resulting disruptions and uncertainty, particularly in the oil market. Have created a period of instability in the production and transportation of global oil.

Initial Shock

Oil markets reacted immediately. Brent Crude, the benchmark used to price the majority of the world’s oil, saw a 7.2% increase during its first trading session following the start of the conflict, the most aggressive single-day increase in recent memory (Yahoo Finance, n.d.). Despite this significant surge, some analysts had forecasted a jump of 9% or higher on the first day, meaning the initial spike was not as severe as some had predicted. However, in the next few days, the prices continued to climb. By the end of the first week, the price had risen 27.8% from the close of the last trading session pre-conflict. By the second week, the price reached 42.3% above the pre-conflict level (Yahoo Finance, n.d.).

Current Price Stabilization

Before the operation, Brent was sitting in the range of $65 to $71 per barrel. As of March 25, that range had increased to around $95 to $105 per barrel, peaking at $119.40 for a short period on March 9 (Yahoo Finance, n.d.). The effective closure of the Strait of Hormuz and the multiple attacks on oil and natural-gas-producing facilities in the region were key contributors to this peak price. On March 21, President Trump issued an ultimatum to Iran. Stating that if the Strait of Hormuz were not reopened within the next 48 hours. The United States would begin strikes on key energy infrastructure sites across the country. This fueled fears of further escalation and even greater disruption to the flow of oil.

However, two days later, on March 23, the President announced a postponement of the strikes. As talks of a potential resolution to the conflict had reportedly begun. Following the announcement, oil prices decreased by more than 10%, reaching their lowest level of the previous two weeks. Signaling a potential price stabilization that has not been seen since the launch of the operation. Although it is unclear whether this short period of postponement will lead to longer-term relief.

Key Geopolitical Factors

Strait of Hormuz:

The most influential factor in terms of oil pricing is the Strait of Hormuz, through which approximately 20% of the world’s oil and natural gas shipments are transported daily. The Strait is effectively closed to shipping, seeing less than 10% export volume of crude and refined products as compared to the pre-conflict level (IEA, 2026). Iran has threatened major strikes against vessels they have not permitted to travel through the Strait, causing major carriers to cease all shipping operations in the area. Control over the Strait is a significant piece of leverage held by Iran, and until an agreement is reached to reopen the Strait of Hormuz, oil prices will continue to be significantly disrupted.

Production and Storage Damage:

According to the International Energy Agency, over 40 major energy facilities across 9 countries have been severely damaged as of late March due to the conflict in Iran. Oil and gas fields, major refineries, ports, and pipelines have all been targeted. The Ras Laffan LNG plant, based in Qatar, the largest production site in the world for LNG, has been heavily impacted by strikes from Iran, reducing Qatar’s LNG exports by 17% (Dahan et al., 2026). Additionally, the largest oil refinery in the UAE, the Ruwais refinery, has halted production due to a fire in its industrial area caused by an Iranian drone strike. These are the most consequential examples of the damage caused by these attacks. Analysts predict that it will take years for some of these sites to reach their full production and distribution levels again.

Strategic Reserves:

Following the disruptions to the oil supply, the 32-member countries of the International Energy Agency. Whose current emergency stockpiles consist of over 1.2 billion barrels of oil, have agreed to release a record 400 million barrels into the market. Marking only the sixth time in the agency’s history, spanning back to 1974 when it was founded. That its members have authorized a coordinated release (IEA, 2026). The release will be carried out over a timeframe that is appropriate to the circumstances of each member country. While this will ease some of the current tensions that have arisen as a result of the conflict and may act to further stabilize the oil pricing. The continued uncertainty of the oil supply chain still poses major challenges to the global market.

Conclusion

Even though oil prices have stabilized slightly following reports of indirect peace talks between the United States and Iran, the future remains uncertain. The Strait of Hormuz will have to be reopened fully to restore any hopes of returning to pre-conflict pricing. And it will take years to fully repair the damage dealt to multiple key oil production and storage facilities. While some measures have been taken to ease the strain on the market. Such as the coordinated release by the IEA and the predicted increase in U.S. oil production. Analysts are forecasting that as long as the conflict continues, the disruption to the oil market will persist.

References

Brent Crude Oil Last Day Finance (BZ=F) Stock Historical Prices & Data – Yahoo Finance. (2026). Yahoo.com. https://finance.yahoo.com/quote/BZ%3DF/history/

Dahan, M. E., Mills, A., & Saba, Y. (2026, March 19). Exclusive: Iran attacks wipe out 17% of Qatar’s LNG capacity for up to five years, QatarEnergy CEO says. Reuters. https://www.reuters.com/business/energy/iran-attack-damage-wipes-out-17-qatars-lng-c apacity-three-five-years-qatarenergy-2026-03-19/

IEA Member countries to carry out largest ever oil stock release amid market disruptions from Middle East conflict – News – IEA. (2026, March 11). IEA.

https://www.iea.org/news/iea-member-countries-to-carry-out-largest-ever-oil-stock-releas e-amid-market-disruptions-from-middle-east-conflict

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