How the Iran war shook oil prices, and what comes next 

Oil markets have lurched from panic to relief and back again since the outbreak of war in the Middle East, with markets bracing for further volatility.

Prices surged more than 55% since the start of the war, with Brent crude jumping from around $72 a barrel on February 27 to nearly $120 at its peak, as fears mounted over supply disruptions through the Strait of Hormuz. Brent crude jumped 51% in March, one of the largest one‑month oil price surges on record.

Headlines about the war led to oil notching its biggest daily gain since the Russia-Ukraine war, while others sent Brent crude to its biggest daily drop in decades.

Here are some of the key moments that oil reacted to since the start of the U.S.-Israeli war against Iran, and where it might go next.

The war began with joint US-Israel strikes against Iran on February 28, a Saturday when oil wasn’t trading. The strikes killed several key Iranian officials, including Ayatollah Ali Khamenei, the Islamic Republic’s longtime supreme leader. Iran responded quickly, hitting infrastructure across Gulf capitals and throwing the region, and millions of barrels of oil, into chaos.

Oil and gas prices jumped during the first trading day since the strikes, as the war halts energy exports from the ​Middle East. Tehran began attacking ships and energy facilities, closing navigation in the Gulf and grinding energy production to a halt from Qatar to Iraq.

The war entered its second week as Iranian oil facilities were hit for the first time. When markets opened on Monday March 9, Brent surged near $120 a barrel, which U.S. President Donald Trump said was a “small price to pay” for defeating Iran. Energy exports in the Gulf remained under pressure as the United Arab Emirates, Iraq and Kuwait cut output, run out of storage.

Markets also reacted to the news that Iran named a new Supreme Leader, Mojtaba Khamenei, the son of the late Ayatollah Khamenei. He is seen as more hardline, with very close ties to the Iranian Revolutionary Guard Corps.

After Israel attacked Iran’s South Pars gas field, Tehran retaliated by striking at Ras Laffan, a major energy facility in Qatar, marking a sharp escalation that sent energy prices surging. South Pars, the world’s largest known natural gas reserve at about 1,800 trillion cubic feet, is also a cornerstone of Iran’s energy supply.

A brief risk off saw Brent dip below $100 per barrel. Trump said that the U.S. and Iran were discussing an end to the war, which marked the first time the warring sides were in touch.

The Iranians threw cold water on this, but these initial discussions reportedly paved the way for a ceasefire just weeks later.

Yemen’s Houthis said they had launched missiles at Israel, marking their first direct involvement in the U.S.- Israel war against Iran.

Crude oil prices jumped as the U.S. Navy imposed a blockade on Iran’s ports after the U.S. and Iran failed to reach an agreement to end the war during negotiations in Pakistan.

Iran’s Foreign Minister Seyed Abbas Araghchi declared the Strait of Hormuz fully open to commercial traffic, sending crude prices falling more than 10% on April 17. 

Oil prices jumped again on April 20 after the U.S. Navy fired on and seized an Iranian container ship in the Gulf of Oman the day before.

Over the weekend, Iran re‑imposed tighter control over the strait within hours of reopening it, with reports of gunfire on tankers and vessels turning back.

Trump called Iran’s actions over the weekend a “total violation” of the truce and renewed threats to strike Iranian power plants and bridges if Tehran refuses a deal.

Vice President JD Vance and U.S. negotiators, including Steve Witkoff and Jared Kushner, are heading to Islamabad on Tuesday for a second round of talks between the United States and Iran. It is unclear who will lead the delegation from Iran’s side.

The talks in Pakistan come as the two-week ceasefire is set to expire. Trump has signaled there will be no extension.

The Strait of Hormuz remains functionally closed as Iran’s military says it will retaliate after the U.S. Navy seized an Iranian-flagged cargo ship.

Commodity Context founder Rory Johnston said that any reopening of the strait would likely trigger an immediate drop of between $10 and $20 in crude prices due to speculative positioning, but that relief would be temporary.

Supply chain bottlenecks, infrastructure damage and lingering production outages would keep the market tight, likely anchoring Brent in the $80 to $90 range rather than a full return to pre-crisis levels, he added.

“This is still the largest oil supply shock in the history of the oil market,” Johnston said, adding that without a sustained restoration of flows, prices may need to rise further to curb demand.