Oil prices climbed sharply on Friday, erasing earlier losses as investors weighed the widening economic fallout from the escalating U.S.–Iran war and the growing threat to global energy supplies moving through the Strait of Hormuz.
By early morning in New York, global benchmark Brent crude had risen 2.2% to $87.27 per barrel, marking a fresh 52-week high, while U.S. West Texas Intermediate crude advanced 3.8% to $84.08. The rally places oil on track for its biggest weekly gain since Russia’s full-scale invasion of Ukraine in 2022, underscoring how quickly geopolitical tensions are spilling into global commodity markets.
The surge in prices results from mounting concern that the conflict between the United States, Israel, and Iran — now in its seventh day — could escalate into a prolonged disruption of Middle Eastern energy exports. Iran’s retaliatory strikes across the Gulf region have already shaken shipping routes and energy infrastructure, while traffic through the Strait of Hormuz has slowed dramatically.
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The narrow waterway, which connects the Persian Gulf with the Gulf of Oman, carries roughly one-fifth of the world’s oil and gas supply under normal conditions. Any sustained disruption to that flow would immediately tighten global supply and ripple through everything from gasoline prices to manufacturing costs.
Energy officials are now openly warning of a severe price shock if shipping through the strait is halted entirely. Qatar’s energy minister, Saad al-Kaabi, told the Financial Times that crude prices could surge to $150 per barrel within weeks if tankers are unable to pass through the corridor — a scenario that analysts say would push the global economy into a fresh inflationary shock.
“Everybody that has not called for force majeure we expect will do so in the next few days if this continues. All exporters in the Gulf region will have to call force majeure,” he said.
“This will bring down the economies of the world. If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody’s energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that cannot supply.”
Such fears intensified after reports suggested that the strait is effectively shut down to commercial traffic as container shipping companies and tanker operators suspend operations due to security concerns.
“We don’t yet know the extent of the damage, as it is currently still being assessed. It is not clear yet how long it will take to repair,” Saad al-Kaabi said.
The latest spike in oil prices briefly paused overnight after Washington granted India, the world’s third-largest oil importer, a temporary 30-day waiver allowing it to resume purchases of Russian crude. The U.S. had earlier imposed a 25% penalty tariff on India for buying Russian oil but withdrew the measure last month in a move widely interpreted as an attempt to ease global supply pressures.
Markets also reacted to reports that the U.S. Treasury is preparing emergency measures aimed at curbing energy price spikes, including potential interventions in the oil futures market.
Even so, the broader trajectory for oil remains sharply upward as the war spreads across the Middle East and threatens a region that produces nearly a third of the world’s crude.
The economic consequences are already being felt. In the United States, the average price of a gallon of regular gasoline jumped nearly 27 cents in just one week to $3.25, according to data from the American Automobile Association. The rapid increase is fueling fears that higher fuel costs could feed into inflation at a time when central banks are still grappling with the aftermath of pandemic-era price surges and recent tariff pressures.
Yet some economists argue the inflationary effect may be more complex.
Atakan Bakiskan, chief U.S. economist at Berenberg, said higher energy prices could paradoxically dampen broader inflation by squeezing consumer spending.
“Contrary to what consensus thinks, I think higher energy prices could actually be deflationary for the U.S.,” Bakiskan said in an interview with CNBC. “Obviously the higher energy price is going to push up headline CPI inflation mechanically. But when you think about it, it also reduces consumer purchasing power.”
Consumers forced to pay more for gasoline typically cut back spending elsewhere, which can slow demand for other goods and services and weigh on core inflation, he added. Still, financial markets remain deeply unsettled by the possibility that the conflict could spread further across the region and drag on for weeks.
U.S. Defense Secretary Pete Hegseth indicated that Washington is preparing for a prolonged campaign against Iran.
“There’s no shortage of American will here,” Hegseth told reporters on Thursday. “If you think you’ve seen something, just wait.”
He added that additional U.S. combat power is continuing to flow into the region.
Maersk Suspends ME-bound Services
The widening conflict has already begun disrupting global supply chains. Danish shipping giant Maersk said it has temporarily suspended two major container services linking the Middle East with Asia and Europe as the security situation deteriorates.
The company halted its FM1 service connecting the Far East to the Middle East and its ME11 route linking the Middle East with Europe. Shuttle services within the Persian Gulf have also been suspended indefinitely. Maersk’s ME1 route between the Middle East and northern Europe will also temporarily skip Jebel Ali — one of the region’s largest ports — as vessels are rerouted to India and Oman.
Container shipping companies across the industry have begun diverting vessels around the southern tip of Africa to avoid the Persian Gulf entirely, dramatically extending voyage times and pushing freight costs higher.
According to freight analytics firm Xeneta, at least 147 container ships are currently sheltering in the Persian Gulf amid the uncertainty. The buildup is creating port congestion, delays, and rising shipping premiums that are quickly spreading through global trade networks.
Logistics analysts warn that if the disruption persists for several weeks, it could trigger a cascade of economic effects similar to those seen during the pandemic — including higher transportation costs, slower delivery times, and shortages of key industrial inputs.
Energy markets remain the immediate flashpoint.
With the Strait of Hormuz effectively closed to much of global shipping and Gulf producers warning that exports could halt within days, traders are increasingly pricing in the possibility of a historic supply shock.
Should crude approach the $150-per-barrel threshold projected by energy officials, the impact would reverberate far beyond oil markets, raising transportation costs, lifting electricity prices, and intensifying inflation pressures worldwide.
So far, markets remain caught between the hope that the conflict will remain contained and the growing realization that the Middle East — the heart of the world’s energy system — has once again become the epicenter of geopolitical risk.