Oil futures surged past $78 per barrel Monday following joint military strikes by the United States and Israel against targets within Iran, escalating tensions across the Middle East and prompting a sell-off in global stock markets. Brent crude rose to between $78 and $80 a barrel, while West Texas Intermediate (WTI) climbed to $70–$73, representing increases of 7–9% and 6–8% respectively, according to the Institute for Energy Research.
The strikes, which began late February 28, 2026, targeted Iranian leadership, including the killing of Supreme Leader Ayatollah Ali Khamenei, as well as nuclear facilities, missile sites, and military infrastructure. President Donald Trump indicated the military campaign could last for weeks. Iran responded with missile and drone strikes targeting U.S. Bases, Israel, and allied nations, with reported incidents impacting oil and gas facilities in Saudi Arabia and Qatar.
The conflict has led to a significant disruption in global energy supplies. Tehran declared the Strait of Hormuz effectively closed, halting a substantial portion of tanker traffic through the critical waterway, which handles roughly one-fifth of the world’s oil shipments. Shipping traffic in the Strait has dropped by over 80%, according to the Institute for Energy Research.
Kuwait Petroleum Corporation has begun cutting oil output and declared force majeure on March 7, citing the war’s impact on exports via the Strait of Hormuz. The United Arab Emirates is actively managing offshore output levels to preserve operational flexibility, and a fire caused by debris at the Fujairah port, a key global oil storage hub, was reported. Iraq has already slashed almost 1.5 million barrels per day (bpd) due to storage and export constraints, with officials warning that figure could rise to 3 million bpd if exports do not resume. Qatar halted operations at its LNG facilities on March 2, impacting a significant portion of global LNG supply, and subsequently suspended parts of its downstream output, declaring force majeure on LNG shipments on March 4.
Global stock markets reacted negatively to the escalating conflict. Japan’s Nikkei 225 fell 1.73 percent, erasing gains made in late February, as investors assessed the impact of potentially $100-per-barrel oil on the nation’s energy-import-dependent economy. Hong Kong’s Hang Seng Index declined 1.58 percent. U.S. Stock index futures slid on Sunday evening, with S&P 500 Futures falling 1.7% to 6,632.75 points.
While the initial price increase is modest compared to historical peaks, analysts suggest markets are currently pricing in a multi-week disruption rather than an indefinite crisis, with U.S. Energy security bolstered by growing domestic production. However, the United Arab Emirates and Saudi Arabia are expected to announce output cuts soon as storage capacity diminishes. China and India are actively seeking alternative energy sources as the crisis continues.
