How the Iran war shook oil prices and what will happen next

Since the outbreak of war in the Middle East, oil markets have staggered from panic to relief and back again, with markets bracing for more volatility.

Prices have soared more than 55% since the start of the war, with Brent crude soaring from about $72 a barrel on February 27 to a peak of nearly $120, amid growing concerns about supply disruptions through the Strait of Hormuz. Brent crude oil rose 51% in March, the largest single-month jump in oil prices ever.

Headlines about the war caused oil prices to post their biggest daily rise since the Russia-Ukraine war, while Brent crude oil prices posted their biggest daily decline in decades.

Here are some key moments in which oil has reacted since the start of the US-Israel war against Iran, and where it could go next.

The war began with a joint US-Israeli attack on Iran on February 28, a Saturday when oil was not being traded. The airstrike killed several key Iranian officials, including Ayatollah Khamenei, the Islamic Republic’s longtime supreme leader. Iran reacted quickly, destroying infrastructure across the Gulf nation’s capitals and throwing the region and millions of barrels of oil into disarray.

Oil and gas prices soared on the first trading day after the strike as the war halted energy exports from the Middle East. The Iranian government has launched attacks on ships and energy facilities, shut down Gulf shipping and halted energy production from Qatar to Iraq.

The war has entered its second week with the first attack on Iranian oil facilities. Brent soared nearly $120 a barrel when markets opened on Monday, March 9, in what US President Donald Trump said was a “small price” to pay to defeat Iran. Gulf energy exports remain under pressure as the United Arab Emirates, Iraq and Kuwait cut production and run out of storage.

Markets also reacted to the news that Iran had named Mojtaba Khamenei, son of the late Ayatollah Khamenei, as its new supreme leader. He has very close ties to Iran’s Revolutionary Guards, and is seen as more of a hardliner.

After Israel attacked Iran’s South Pars gas field, Iran retaliated by attacking Ras Laffan, Qatar’s main energy facility, marking a sharp escalation that sent energy prices soaring. South Pars is home to the world’s largest known natural gas reserves, at approximately 1,800 trillion cubic feet, and is the linchpin of Iran’s energy supply.

A temporary risk-off pushed Brent prices below $100 per barrel. President Trump said the United States and Iran were in talks to end the war, and that this was the first time the warring sides had made contact.

These early talks reportedly paved the way for a cease-fire just weeks later, although Iran threw cold water on the deal.

Yemen’s Houthis launched a missile at Israel, announcing their first direct involvement in the U.S.-Israel war against Iran.

Oil prices soared after the US Navy blocked Iranian ports after the US and Iran failed to reach an agreement to end the war during negotiations in Pakistan.

Iranian Foreign Minister Seyyed Abbas Araghchi declared the Strait of Hormuz fully open to commercial traffic, and oil prices fell by more than 10% on April 17.

Oil prices rose again on April 20 after the US Navy fired on and captured an Iranian container ship in the Gulf of Oman the day before.

Last weekend, Iran tightened its control over the strait within hours of reopening after reports of tankers and ships turning back.

President Trump called Iran’s actions over the weekend a “total violation” of the cease-fire agreement and renewed his threat to attack Iranian power plants and bridges if Iran rejects the deal.

Vice President J.D. Vance and U.S. negotiators, including Steve Witkoff and Jared Kushner, are heading to Islamabad on Tuesday for a second round of U.S.-Iran negotiations. It is unclear who will lead the Iranian delegation.

The talks in Pakistan took place as a two-week ceasefire deadline approaches. President Trump has indicated there will be no extension.

The Strait of Hormuz remains functionally closed as the Iranian military has announced plans to retaliate after the US Navy seized an Iranian-flagged cargo ship.

Rory Johnston, founder of Commodity Context, said speculative positions would likely cause oil prices to drop by $10 to $20 immediately once the Channel reopens, but any relief would be temporary.

He added that supply chain bottlenecks, infrastructure damage and prolonged production disruptions will tighten the market and Brent prices are likely to remain in the $80-$90 range rather than fully returning to pre-crisis levels.

“This remains the biggest oil supply shock in the history of the oil market,” Johnston said, adding that without a sustained recovery in supplies, prices may need to rise further to suppress demand.