Oil Prices Soar as Iran Conflict Drags On

The global oil market is facing significant price hikes and potential shortages due to the ongoing conflict in Iran. Since February 2026, oil prices have increased from $65 a barrel to over $100 a barrel, with some analysts predicting prices could reach $150 or even $200 a barrel. The Strait of Hormuz, which accounts for most of the world's oil exports, has seen traffic drop below 15% of pre-war levels.

The Saudi East-West pipeline, which carries up to 7 million barrels per day, was attacked in mid-September and has been operating at low volumes since. The threat of further attacks on Red Sea oil exports is adding to inflationary pressures. In the US, 47 states have seen record-high diesel prices, with the national average reaching $6.52 per gallon.

The additional fuel costs are substantial: between March 1 and late September, Americans spent an extra $72 billion on gasoline and $45 billion more on diesel compared to the same period in 2025. Outside the US, countries reliant on imports from the Persian Gulf have been hit hard, with some rationing fuel or enacting emergency measures.

China has released reserves to contain oil prices but its demand is starting to creep up again, coupled with a tighter market, which may result in additional price hikes. The international community's toolbox for curbing oil demand and boosting supply is largely empty, leaving prices on the brink of spiking again.