Global energy markets are reeling after Iran declared the Strait of Hormuz closed following U.S. and Israeli strikes on the country, triggering one of the most significant oil price shocks in recent memory. Crude oil prices jumped more than 10% over the weekend, briefly surpassing $80 a barrel, before settling slightly lower on Monday. Global crude then surged past 9% again late Monday as the conflict entered its third day. According to Deutsche Bank analyst Jim Reid, Monday’s intraday spike of 8.2% ranked as only the 38th largest daily oil price increase since 1990 — a sobering reminder of how much worse things could get if the crisis deepens.
The Strait of Hormuz, through which approximately 20% of the world’s oil and gas is shipped, has seen tanker traffic come essentially to a halt. Iran has broadcast radio warnings to vessels intending to cross the strait, and four ships have already been struck in Gulf waters since the conflict began. Shipping companies and insurers are refusing to risk passage. The disruption has compounded an already volatile year for oil markets — prices had risen 17% in 2026 even before the latest escalation, driven by President Donald Trump’s ramped-up rhetoric against Tehran and tightened U.S. sanctions on Iran.
Pump Prices and Household Energy Bills Under Pressure
British motorists are already feeling the strain. The average petrol price currently stands at 133.4p per litre, with diesel at 143.2p, according to AA data. Analyst Patrick de Haan of GasBuddy estimates U.S. gasoline prices could rise by 10 to 30 cents per gallon in coming days, with some stations potentially seeing increases of as much as 85 cents. UK households on variable energy tariffs may not feel the full impact until the price cap review covering the three months from July, though energy suppliers could begin repricing fixed-rate deals sooner. Heating oil users in Northern Ireland and rural areas face particular vulnerability.
LNG Markets and Key Infrastructure Hit Hard
The conflict has also severely disrupted liquefied natural gas supplies. QatarEnergy, the world’s largest LNG supplier — responsible for roughly 20% of global supply — was forced to halt production Monday after an apparent Iranian drone attack. Meanwhile, Saudi Aramco shut its Ras Tanura refinery, which processes around 550,000 barrels per day, after it was struck by debris from intercepted Iranian drones. European gas prices soared to their highest level since Russia’s invasion of Ukraine in 2022. Iran also struck a port facility in Oman and a vessel northwest of Muscat.
Despite the turmoil, OPEC+ agreed over the weekend to increase production by more than 200,000 barrels per day starting next month — a larger-than-expected move aimed at calming markets. Gold futures jumped more than 2%, or over $100, as investors fled to safe-haven assets. Trump said Monday that the U.S. would continue large-scale strikes on Iran, warning the conflict could last weeks or potentially longer. Some analysts warn that if Brent crude sustains its rise, prices could reach $100 a barrel — reigniting inflationary pressures that Western economies were only beginning to leave behind.
