The United States and Israel’s war on Iran could force consumers and businesses worldwide to face weeks or months of higher fuel prices, even if the conflict—now in its eighth day—ends quickly. Damaged facilities, disrupted logistics, and elevated shipping risks could challenge suppliers.
This outlook threatens the global economy and creates a political vulnerability for US President Donald Trump ahead of the midterm elections, as voters respond sensitively to energy bills and oppose foreign entanglements.
Oil Prices Surge as War Disrupts Supply
Global oil prices have surged more than 25 percent since the war began, driving up fuel costs for consumers worldwide.
The American Automobile Association (AAA) reported that the national average petrol price reached $3.41 per gallon ($0.9 per litre) on Saturday, rising $0.43 over the past week. Goldman Sachs warned that oil prices could climb above $100 per barrel if shipping disruptions persist.
US crude oil settled just below $91 per barrel on Friday, marking its largest weekly gain on record since 1983 and signaling that prices could continue rising.
JP Morgan analysts told Reuters earlier this week, “The market is shifting from pricing pure geopolitical risk to grappling with tangible operational disruption, as refinery shutdowns and export constraints impair crude processing and regional supply flows.”
Strait Shutdown Halts Millions of Barrels of Oil
A near-complete shutdown of the strait has forced the region’s top oil producers—Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait—to suspend shipments of up to 140 million barrels of oil, equal to about 1.4 days of global demand, to refiners worldwide.
The World Bank notes that more than 80 percent of global trade moves by sea, so disruptions in the waterway could raise freight costs and delay deliveries of goods.
Djibouti’s Finance Minister, Ilyas M. Dawaleh, warned on Saturday that the fighting would “bring severe economic consequences for developing countries.” He wrote on X that small states relying on maritime trade “risk being pulled into deeper economic uncertainty as external shocks ripple across the region and #Africa.”
Egypt’s President Abdel Fattah el-Sisi said last week that his country’s economy is in a “state of near-emergency,” highlighting growing inflation.
Gulf Storage Near Capacity, Production Cuts Loom
Analysts, traders, and sources told Reuters that oil and gas storage at Gulf facilities is rapidly filling, forcing Iraq and Kuwait to cut production, with the UAE likely to follow.
A source at a state oil company, speaking anonymously to Reuters, said, “At some point soon, everyone will also shut in if vessels do not come.”
Amir Zaman, head of the Americas commercial team at Rystad Energy, added that oilfields forced to shut in across the Middle East could take days, weeks, or even months to return to normal, depending on the field type, age, and extent of the shutdown.
Iranian Attacks Disrupt Energy Infrastructure
Iranian forces are targeting regional energy infrastructure, including refineries and terminals, causing shutdowns and damaging some operations that now require repairs.
Qatar declared force majeure on its large gas exports on Wednesday after Iranian drone attacks, with sources telling Reuters that production may take at least a month to normalize. Qatar supplies 20 percent of global liquefied natural gas (LNG).
Saudi Aramco also shut its Ras Tanura refinery and crude export terminal due to attacks, though details on the damage remain unclear.
Economic Outlook: Higher Prices, Slower Growth
Economists warn that the combined disruptions could push energy prices higher while slowing global economic growth.
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