Rising Oil Prices Trigger Global Response to Middle East Conflict

Iran warned that global oil prices could surge to $200 per barrel after Iranian forces attacked merchant ships on Wednesday. The International Energy Agency (IEA) urged countries to release large amounts of strategic oil reserves to soften what could become one of the worst oil shocks since the 1970s.

The conflict escalated after joint U.S. and Israeli airstrikes launched nearly two weeks earlier. The strikes have reportedly killed about 2,000 people, mostly in Iran and Lebanon, and triggered major disruptions in global energy markets and transportation.

Despite heavy bombardment, Iran continued retaliatory actions. On Wednesday it launched strikes against Israeli targets and other locations in the Middle East, signaling it still had the capability to respond militarily.

Three commercial vessels were reported hit in Gulf waters the same day. Iran’s Revolutionary Guards said their forces targeted ships that ignored their orders.

U.S. President Donald Trump indicated the military campaign would continue without a clear timeline. Speaking at a rally in Kentucky, he claimed the war had already been won but said the United States should not withdraw prematurely. He said U.S. forces had destroyed 58 Iranian naval vessels and argued Iran’s military capabilities had been severely weakened.

Trump also said Washington would closely monitor the Strait of Hormuz, a strategic waterway through which roughly 20% of the world’s oil supply passes. He claimed Iranian naval forces had largely been neutralized, though Iran insisted the strait remained under its control.

Shipping through the strait remains highly uncertain. Reports suggested Iran had placed roughly a dozen naval mines in the channel, complicating navigation and effectively creating a blockade along its coastline.

In response to the growing risks, the G7 nations — the United States, Canada, Japan, Italy, Britain, Germany and France — agreed to explore providing naval escorts for commercial ships moving through Gulf waters.

U.S. officials also warned about possible Iranian drone threats and potential attacks on American energy infrastructure in Iraq by Iranian-aligned militias.

Washington and Tel Aviv say their objective is to eliminate Iran’s ability to project military force beyond its borders and dismantle its nuclear program.

Oil markets reacted sharply to the conflict. Prices had already surged close to $120 per barrel earlier in the weekbefore easing to around $90, but they climbed again by nearly 5% on Wednesday amid renewed fears of supply disruptions. At the same time, major U.S. stock indexes fell.

Iranian drone and missile strikes have also hit ports and cities in Gulf countries and targets inside Israel during the conflict.

The U.S. military warned civilians in Iran to avoid ports with naval facilities, prompting Iran’s military to respond that if such sites were threatened, economic and commercial centers across the region would become “legitimate targets.”

With gasoline prices already rising and U.S. midterm elections approaching, energy costs have become a major political concern in Washington.

To stabilize markets, the International Energy Agency recommended releasing 400 million barrels from global strategic reserves, the largest coordinated release ever proposed. The U.S. government quickly supported the plan, with the Energy Secretary announcing that 172 million barrels from the Strategic Petroleum Reserve would begin entering the market the following week.

However, analysts note that the speed and volume of these releases vary by country and would only replace a small portion of the oil normally passing through the Strait of Hormuz.

Iran signaled it intends to sustain economic pressure. A spokesperson for the country’s military command warned that the oil market depends on regional security and that continued instability could push prices toward $200 per barrel.

The spokesperson also warned that Iranian forces might target banks conducting business with the United States or Israel after a bank office in Tehran was hit during overnight airstrikes.

Meanwhile, maritime incidents continued. A Thai-flagged bulk carrier caught fire after being struck at sea, forcing the crew to abandon the ship, with three people reported missing. Two other vessels — a Japanese-flagged container shipand a Marshall Islands-flagged bulk carrier — were also damaged by projectiles. Since the conflict began, 14 merchant ships have reportedly been struck.

Inside Iran, large funeral gatherings were held for senior commanders killed in the airstrikes. Crowds carried coffins and displayed flags and portraits of Supreme Leader Ayatollah Ali Khamenei and his son Mojtaba Khamenei.

According to an Iranian official, Mojtaba Khamenei was lightly wounded earlier in the war when strikes killed several members of his family, including his father. He has not appeared publicly since the conflict began.

Despite calls from Washington encouraging Iranians to rise against the government, large-scale uprisings have not materialized. Iran’s police chief warned that anyone protesting in the streets would be treated as an enemy rather than a demonstrator, adding that security forces were prepared to respond immediately.