Oil prices surged Monday, reaching a nearly four-year high as escalating tensions in the Middle East prompted threats of attacks on energy infrastructure, according to analysts. International benchmark Brent crude futures settled up 3.26% at $112.19 a barrel on Friday, the highest level since July 2022, while U.S. Crude oil gained 2.27%, or $2.18, to settle at $98.32 per barrel.
The price increases follow an Israeli strike on Iran’s South Pars natural gas field, triggering retaliatory threats from Iran targeting U.S.-linked infrastructure in the Gulf, including energy and desalination facilities. U.S. President Donald Trump warned Saturday that the U.S. Would “obliterate” Iran’s power plants if Tehran did not fully reopen the Strait of Hormuz within 48 hours.
The conflict has already caused the largest supply disruption in the history of the global oil market, with shipping through the Strait of Hormuz – a critical waterway for global oil transport – reduced to a trickle. Approximately 20 million barrels per day of crude oil and oil products typically transit the Strait, representing around 20% of global oil consumption.
The International Energy Agency (IEA) has already agreed to release 400 million barrels of oil from emergency reserves, the largest stock draw in the Agency’s history, in an attempt to stabilize markets. However, the IEA acknowledged that supply-side measures alone are insufficient to fully offset the disruption and is urging demand-side actions from governments, businesses, and households.
Demand-side measures being considered focus on reducing oil consumption in road transport, aviation, cooking, and industry. The IEA report identifies ten measures that could be implemented quickly to alleviate pressure on consumers and support energy security.
Defense Secretary Pete Hegseth stated the U.S. Has already struck more than 7,000 targets across Iran, with Joint Chiefs Chairman Dan Caine confirming continued attacks deeper into Iranian territory. The Pentagon is seeking an additional $200 billion to fund the ongoing military operations, a figure Hegseth indicated “could move.”
IG market analyst Tony Sycamore warned that Trump’s ultimatum represents a “48-hour ticking time bomb of elevated uncertainty” and predicted a spike in oil prices if the threat is not withdrawn. Energy Aspects founder Amrita Sen stated that Trump is attempting to escalate the conflict further, potentially leading to “scorched earth for Gulf infrastructure.”
Iran has already launched attacks on ports and refineries in Saudi Arabia, Kuwait, Bahrain, the UAE, and Qatar in response to attacks on its own infrastructure. The war in the Middle East has already caused wholesale gas prices to rise by 67% and oil prices to rise by 35% between February 28 and March 12, according to the Institute for Fiscal Studies.
As of Sunday, Iran maintained its threat of retaliation, while the U.S. Has not publicly altered its position regarding the reopening of the Strait of Hormuz.
