Oil prices are on the rise, hitting an 18-month high as of Tuesday as the conflict between the United States, Israel, and Iran continues.
The war against Iran, which started in earnest over the past weekend, has disrupted oil and gas shipments in the Middle East, constricting supply, and with no clear timetable as to when the war could end (or if there’s a plan for a drawdown), markets are spooked about the potential for a prolonged conflict and market hiccups. Specifically, concerns about shipments getting through the Strait of Hormuz—a busy shipping lane for fossil fuel-carrying tankers—have been effectively stopped, and no one knows with any certainty as to when it could reopen.
Additionally, insurers have cancelled war risk coverage policies for ships and vessels traveling through the region, increasing costs. That likely means that shippers will increase shipping rates in turn. Reuters reports that several tankers have already been damaged as a result of the conflict, and around 150 ships were stranded around the Strait of Hormuz as of Monday.
Iran, too, is a large oil exporter, and the war itself could stifle production and further impact supply. As of December 2025, Iran was shipping out around 1.9 million barrels of crude oil per day.
Oil prices, as a result, shot up in recent days. Brent crude, which is the global benchmark in the oil market, was trading at more than $82 per barrel as of midday Tuesday. That’s up almost 13% over the past week, and the highest price since July 2024. U.S. West Texas Intermediate (commonly called “WTI”), the other main crude benchmark, was likewise trading near $76 per barrel, up around $10 from a week ago.
Unfortunately for consumers, the increased oil prices are likely to be felt at home and at the pump. U.S. gas prices have gone up, and are now averaging more than $3 per gallon. Heating oil and propane are likely to follow suit.
The concerns, now, are what happens next. Several analysts in the energy and investment bank sectors have warned that crude oil prices could increase to $100 per barrel if the war and disruptions to shipping continue. Again, it’s unknown if or when the U.S. and Israel plan to back down, or whether the situation will de-escalate; or when the oil markets will be able to get a handle on what’s going on and adjust.
But some analysts are saying that there is good news: The U.S. economy isn’t nearly as exposed, currently, as it once was to oil supply shocks. Joe Brusuelas, principal and chief economist for RSM, writes that the U.S. currently produces almost 19% of the world’s oil, amounting to only 0.4% of its GDP. That means that “the American economy is far less exposed to economic and inflation disruptions” related to crude oil crises, he writes, and that “the risk to the growth and inflation outlook is modest.”
So, while concerns related to the broader economy and inflation aren’t over the top, it doesn’t, unfortunately, mean that gas prices and utility bills won’t go up as a result in the near future.
