U.S. Defense Secretary Pete Hegsetts announced on Tuesday that the most intense and heaviest U.S. Strikes in Iran are expected, while simultaneously asserting that the war will only end when the enemy is “completely and utterly defeated.” The statement came during a press conference in Washington as the conflict, initiated by U.S. And Israeli strikes against Iran on February 28th, continues to escalate.
The comments followed a warning from U.S. President Donald Trump that the end of the war is near, though he has not specified a timeframe. Initially, the Pentagon projected that air strikes against Iran could last between three and eight weeks. Hegsetts, however, emphasized that the duration is not predetermined. “We are in a very strong position, giving the President of the United States maximum options. And from the outset, from this podium, we have not indicated how long it will take. Our will is limitless. But I wish the American people to understand that this war is not endless. The President has set a very specific mission that must be accomplished, and our task is to relentlessly implement it. And he is the one who makes the decisions,” he stated.
Currently, U.S. Forces are focused on three key objectives: destroying Iran’s ballistic missile capabilities, eliminating its drone capacity, and dismantling Iran’s naval forces and military production facilities. Hegsetts addressed concerns regarding civilian casualties, stating that all allegations are being investigated. “That’s how terrorist regimes fight. They target civilians. We do not…,” he said.
The escalating tensions have already impacted global energy markets. Brent crude oil prices rose nearly 10% to $79.97 per barrel, while West Texas Intermediate (WTI) crude increased by 9% to $73 per barrel. Natural gas prices on the Dutch TTF exchange saw an approximate 20% increase. The conflict has significantly disrupted tanker traffic through the Strait of Hormuz, a critical waterway for approximately 20% of the world’s oil and liquefied natural gas exports. Since the start of the U.S.-Iran conflict on February 28th, Brent crude has increased by roughly 38%.
Latvia’s economic outlook is closely tied to global energy prices, and the current situation in the Middle East presents substantial risks. According to Latvia’s Saeima’s Committee on Economic, Agricultural, Environmental and Regional Policy, the primary impact in Latvia is expected to be through energy resource prices. A short-term conflict is anticipated to cause price fluctuations, but a prolonged conflict could lead to sustained high energy prices, impacting both inflation and business competitiveness. Economists predict that if the Iranian conflict and energy supply disruptions continue for more than four weeks, oil, gas, and electricity prices could rise by 15-20%. This could translate to a 10-15% increase in household energy tariffs in 2026 compared to pre-conflict projections. Average Latvian households currently spend approximately 6-10% of their budget on energy, one of the highest proportions in the European Union. Increased costs for electricity and heating could add €20-35 per month to household expenses, reducing disposable income.
Fuel prices have already risen by an average of 3.2%, and a prolonged conflict could pose greater risks to diesel and aviation fuel. If oil prices remain high for an extended period, Latvia may necessitate to revise its 2026 public expenditure and implement temporary tax relief measures for businesses.
The current situation draws parallels to the 1973-1974 oil crisis, though the origins of that crisis predate the current conflict. The 1973 crisis was precipitated by the 1967 Six-Day War and the subsequent blockage of the Suez Canal for eight years, forcing ships traveling from the Persian Gulf to Europe to circumnavigate Africa, increasing costs and disrupting global logistics. The 1973 oil crisis formally began on October 17th when the Organization of Arab Petroleum Exporting Countries (OAPEC) declared an embargo against countries supporting Israel during the Yom Kippur War. Oil prices surged from $3 to $12 per barrel, significantly impacting the U.S. And Western European economies, leading to stock market crashes and increased inflation.
In response to the escalating crisis, the international community is exploring measures to mitigate the potential impact. Baltic states, along with Germany, are considering releasing portions of their oil reserves to curb fuel price increases. Latvia could potentially release up to 40,000 tons of oil reserves. The Ministry of Climate and Energy notes that while Baltic regional oil supplies are not directly affected, global energy markets are interconnected. The European Commission emphasizes the provision of reliable, affordable, and clean energy through measures such as supporting the competitiveness of clean technology industries and promoting renewable energy production.
On Saturday, President Trump threatened to strike Iranian power stations if Iran does not fully open the strategically important Strait of Hormuz within 48 hours. He warned that the U.S. Would destroy “various power stations, starting with the largest.” Iranian officials responded by warning that any attack on its energy infrastructure would be met with strikes against all energy facilities in the Middle East linked to the U.S. And Israel, including desalination plants and IT infrastructure. Ali Laridjani, head of Iran’s Supreme National Security Council, warned that the entire region could be cut off from energy within half an hour if Iran’s electricity grid were targeted.
Latvia’s Security Service assesses the threats to the country as low. While current oil and gas futures do not indicate long-term trade disruptions, the situation remains tense. Some analysts believe the global economy is less sensitive to energy shocks than it was decades ago due to a lower energy intensity. However, a continued conflict in the Middle East could create new challenges for central banks in combating inflation and trigger further supply shocks in other commodities.
