The recent U.S. military strikes on Iran have raised urgent concerns about global oil and gas supplies, with experts warning that escalating tensions could drive up energy costs for consumers, including higher prices at the gas pump.
Shortly after markets opened on Sunday night, West Texas Intermediate (WTI) crude — the U.S. oil benchmark — surged 4%. But by Monday afternoon, prices had dropped more than 7%, as analysts weighed the likelihood of Iran actually closing the Strait of Hormuz, a key oil transit route. While Iran’s parliament voted to cut off access to the strait, the final decision rests with the country’s top national security council.
The geopolitical uncertainty has sparked fears that a deeper conflict could disrupt global oil supplies — and with them, prices for gas, heating, and other petroleum-based goods. Tensions further escalated after Iran announced it had launched an attack on the U.S. Al Udeid Air Base in Qatar on Monday.
Why the Strait of Hormuz Matters
Iran, one of the world’s largest crude oil producers, controls the northern edge of the Strait of Hormuz — a narrow but strategically vital passage through which around 20% of the world’s daily oil supply travels. The strait links the Persian Gulf to the Arabian Sea and is a crucial artery for energy exports from the Gulf region.
David Oxley, chief climate and commodities economist at Capital Economics, noted that Iran could attempt to close the strait through several methods, including detaining ships, impeding navigation, or laying naval mines. However, he added that unless the conflict spirals into a prolonged war, any energy price spikes would likely be short-lived.
How Have Oil Prices Reacted?
Despite an initial jump, oil prices have since moderated:
- Brent crude, the global benchmark, dipped 0.1% to $76.98 per barrel by Monday afternoon.
- WTI crude fell 3.8% to $71.06 per barrel — though still higher than the $68 per barrel level before the latest flare-up in hostilities.
Analysts say the market remains volatile. While the closure of the Strait of Hormuz remains unlikely, the risk of targeted attacks on oil infrastructure is rising. According to a June 23 report from the Eurasia Group, a greater threat may lie in potential Israeli airstrikes on Iran’s oil export facilities, or retaliatory attacks by Iranian proxy forces on infrastructure in Iraq — either of which could push Brent prices past $80 per barrel.
So far, Israel has avoided hitting Iran’s oil operations directly. But if that changes, global supply could take a serious hit.
What If the Strait Is Closed?
Though narrow — just 21 miles wide at its tightest point — the Strait of Hormuz carries enormous importance for global trade. A closure or even temporary disruption could send shockwaves through energy markets, especially in Asia.
The U.S. imports only about 7% of its oil through the strait, but its closure would still have significant global repercussions. According to the U.S. Energy Information Administration (EIA), major Asian economies like China, India, Japan, and South Korea would be hardest hit, as they rely heavily on crude shipped through the passage.
A complete closure could push oil prices to as high as $130 per barrel, according to a June 20 forecast by Oxford Economics. Such a spike could trim global GDP by 0.8 percentage points, the analysts warned.
The last time prices reached that level was in 2008, amid a surge in global energy demand. At the time, U.S. gasoline hit a record high of $4.11 per gallon — or about $6.26 today after adjusting for inflation.
What Does This Mean for U.S. Gas Prices?
Americans should expect higher gas prices in the short term. According to Patrick DeHaan, an analyst at GasBuddy, drivers could see prices rise by 10 to 15 cents per gallon over the coming week.
“Most, if not all, of the expected increase is due to tensions in the Middle East,” he said.
Still, gas prices remain lower than they were a year ago. As of now, the national average is $3.22 per gallon, down from $3.45 at this time last year, according to AAA.
The Bottom Line
While the U.S. and global markets have yet to experience the full brunt of any disruption, the energy sector remains on edge. A full-scale closure of the Strait of Hormuz or direct attacks on oil infrastructure could trigger severe global supply shocks and send prices soaring.
For now, the situation remains fluid. Experts emphasize that any major escalation would affect not just oil prices, but also broader economic stability — especially for countries heavily dependent on Gulf energy exports.
