Brent crude has surged toward 115 dollars a barrel after Iran stepped up missile and drone attacks on key energy facilities across the Gulf, stoking fears of a new oil shock and rattling global stock markets already on edge over the widening Middle East war. Traders say the conflict has now morphed into an “energy war,” with Tehran striking regional infrastructure and threatening more, while U.S. allies struggle to keep shipping lanes open and investors brace for higher inflation and slower growth.
From regional war to energy war
In the early weeks of the conflict, markets focused on the risk that fighting between Iran, Israel and their proxies might spill over into shipping lanes and oil exports. That risk has now materialized.
Bloomberg and other outlets report that after U.S.‑Israeli strikes hit Iran’s South Pars gas field and associated facilities at Asaluyeh, key assets for domestic supply and exports to Iraq and Turkey, Iran vowed to retaliate by targeting similar energy sites in Gulf Arab states.
Iran’s Revolutionary Guard and state‑linked media have since:
- published lists of refineries, LNG terminals and oil‑processing plants in Saudi Arabia, Qatar and the United Arab Emirates, warning residents to avoid them
- declared those sites “direct and legitimate targets” in response to the South Pars strike
- threatened to hit “enemy infrastructure previously thought to be safe,” according to Fars and Tasnim news agencies
Energy analysts told Bloomberg this marks a shift from sporadic attacks to an overt “back‑and‑forth energy war” aimed at leveraging oil and gas flows as strategic pressure on the U.S. and its allies.
What has been hit so far
The list of damaged or disrupted facilities is growing.
- In Bahrain, state oil company Bapco said an attack damaged its Al‑Ma’ameer refinery complex, forcing it to declare force majeure on some operations.
- Qatar confirmed damage at Ras Laffan, the world’s largest LNG hub, after Iranian missiles struck the industrial zone; local authorities reported “extensive damage” and a temporary reduction in exports.
- Saudi Arabia said its air defenses intercepted waves of drones targeting the Shaybah oil field, a key installation in the kingdom’s southeast, but acknowledged minor disruptions.
- Iran itself partially suspended operations at South Pars, citing fires from the earlier strike, and reported hits on an oil‑processing plant and refinery.
Regional governments say at least 21 people have been killed across Gulf states since Iran began retaliatory strikes on energy‑related sites, including civilians near Bahrain’s Sitra island and Qatari workers at Ras Laffan.
At sea, officials and traders say the Strait of Hormuz, through which roughly a fifth of global seaborne oil normally flows, remains “all but impassable” amid mine threats and ongoing military operations.
Brent races higher, markets wobble
Against that backdrop, oil prices have surged.
The Financial Times reports that Brent crude futures topped 115 dollars at one point on Thursday, their highest in more than two years, before easing slightly as traders assessed damage and the prospect of emergency stock releases. U.S. benchmark West Texas Intermediate (WTI) climbed toward 100 dollars as domestic reserves and a stronger dollar tempered gains.
Key moves include:
- Brent up more than 70 percent since the start of the year, and over 40 percent since the first strikes on Iran in late February.
- European gas prices jumping about 25 percent in a single session on supply fears.
- Global equity indices slipping as investors rotate into energy stocks and safe‑haven assets such as gold and the dollar.
DTN notes that Brent had already surged above 107 dollars after Iran reported the initial hits on South Pars and vowed to retaliate, marking the 11th gain in 13 trading sessions since U.S.‑Israeli strikes began.
So far, strategists at Fortune argue it is “almost inexplicable” that crude is not higher still, given the scale of disruption, attributing the relative restraint to spare OPEC+ capacity, expectations of demand destruction at high prices and the prospect of emergency reserve releases.
Washington’s scramble to contain the shock
In Washington, the Trump administration is trying to keep a lid on prices even as it presses allies to help reopen Hormuz.
Bloomberg reports that President Donald Trump has temporarily waived the Jones Act, a century‑old law that restricts foreign ships from moving fuel between U.S. ports, to make domestic energy transport cheaper. The administration is also preparing additional releases from the Strategic Petroleum Reserve, adding to volumes already scheduled to hit the market in the coming weeks.
Vice President J.D. Vance and senior officials are due to meet U.S. oil executives to discuss increasing production and exports, even as companies grapple with pipeline bottlenecks and investor pressure for capital discipline.
At the same time, Trump has publicly berated European and Asian allies for not sending more warships to secure Hormuz, telling followers on his social‑media platform that “US allies need to get a grip, step up and help open the Strait of Hormuz.”
Why prices aren’t even higher, yet
Despite the dramatic headlines, several factors are tempering the immediate price spike.
Analysts quoted by the FT and Bloomberg point to:
- OPEC+ spare capacity, particularly in Saudi Arabia and the UAE, which could offset some lost Iranian output if they choose to ramp up.
- Emergency reserves in the U.S. and IEA member countries that can be released to blunt short‑term shortages.
- Expectations that higher prices will dampen demand, especially in Europe and parts of Asia where growth is already slowing.
Fortune notes that refined products such as jet fuel and diesel have actually rallied even more sharply than crude, reflecting tight capacity at refineries and specific bottlenecks in shipping and storage.
Still, with futures curves moving deeper into backwardation, where near‑term prices are higher than longer‑term ones, traders are clearly pricing in a significant risk premium for the next several months.
Inflation and growth fears resurface
For central banks and finance ministries, the surge raises uncomfortable echoes of past oil shocks.
Economists warn that:
- A sustained Brent price above 110–115 dollars would likely add several tenths of a percentage point to headline inflation in major importers, complicating plans by the Federal Reserve, ECB, and others to cut interest rates.
- Higher fuel and shipping costs could squeeze corporate margins and consumer spending at a time when global growth is already projected to be only slightly above 3 percent.
- Emerging markets that rely on Gulf oil and have limited fiscal space, especially in South Asia and sub‑Saharan Africa, face renewed pressure on trade balances and subsidies.
Stock markets have reacted accordingly: energy shares are outperforming, while airlines, logistics companies and rate‑sensitive sectors such as housing have come under renewed selling pressure.
What to watch next
Analysts say the next few days will determine whether Brent’s move toward 115 dollars is a spike, or the start of a new plateau.
Key variables include:
- Damage assessments at Ras Laffan, Al‑Ma’ameer and South Pars, and how quickly output can be restored.
- Whether Iran follows through on threats to hit additional Gulf energy sites, or whether back‑channel diplomacy persuades both sides to pull back.
- The success of efforts to partially reopen the Strait of Hormuz, even under naval escort, to restore tanker flows.
- Decisions by OPEC+ on raising production to stabilize prices, and by the U.S. and IEA on further strategic‑reserve releases.
For now, traders, policymakers and consumers are united by a single, uncomfortable reality: as long as missiles and drones are flying over the world’s most important oil corridor, Brent’s flirtation with 115 dollars may prove to be a staging post rather than a peak.