Israel-Iran War: Oil Prices Surge as Conflict Escalates

The conflict between the United States, Israel, and Iran is entering its second week, with Israel’s defense minister signaling a commitment to continue military operations “as long as necessary.” This comes as oil prices remain elevated and concerns mount over disruptions to global trade, particularly through the strategically vital Strait of Hormuz. The duration of the conflict remains uncertain, despite suggestions from U.S. President Donald Trump that it could be nearing a conclusion.

Israel’s Stance: A Commitment to Prolonged Action

Israeli Defense Minister Israel Katz stated on Wednesday that the operation against Iran will continue “without any time limitations,” according to the Financial Times. Katz emphasized that the campaign will proceed until “all our goals are achieved and we ultimately win.” This policy is being jointly determined by Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump. The minister likewise claimed that “many thousands” of Iranian security forces have been killed since the start of the joint campaign with the U.S., though independent verification of this figure is currently unavailable.

Trump initially suggested the war was “totally finished” earlier this week, but later walked back those comments. This inconsistency highlights the complex and evolving nature of the situation, and the potential for shifting strategies from the U.S. Side.

Oil Prices and the Strait of Hormuz

The conflict has already had a significant impact on global energy markets. Following the initial attacks, crude oil prices surged, reaching $119 per barrel on Monday morning – the highest level since 2022. While prices have since retreated, they remain substantially higher than pre-conflict levels, which were around $65-$70 per barrel. As of Wednesday evening, Brent crude was trading at $92 per barrel, and West Texas Intermediate (WTI) at $87 per barrel.

A major point of concern is the disruption to oil transport through the Strait of Hormuz, a critical artery for the global economy, handling approximately one-fifth of the world’s oil supply. Iranian attacks on Wednesday targeted at least three vessels in the strait, effectively blocking passage. Iran’s Islamic Revolutionary Guard Corps (IRGC) commander Alireza Tangsiri stated that ships must obtain permission from Iranian authorities before transiting the strait, further escalating tensions. CNN reports that Iran has effectively closed the strait.

Attacks on Shipping and Trump’s Response

The attacks on shipping have included the Thai-flagged vessel Mayuree Naree, which was hit by two projectiles, leading to the evacuation of its 20-member crew and the reported loss of three crew members. The Japanese-flagged container ship ONE Majesty and the Marshall Islands-flagged Star Gwyneth were also damaged, though their crews were unharmed, according to Al Jazeera.

In a surprising statement, President Trump urged ships to “show a little courage” and continue transiting the Strait of Hormuz, dismissing concerns about Iranian attacks. He stated there was “nothing to be afraid of.” This comment contrasts with the heightened security concerns and the practical difficulties faced by shipping companies.

Iran’s Economic Threat: $200 Oil

Adding to the economic pressure, a spokesperson for Iran’s Armed Forces General Staff, Ebrahim Zolfakari, warned on Wednesday that the world should prepare for oil prices to reach $200 per barrel. He attributed this potential price increase to regional instability caused by the ongoing conflict. This statement underscores Iran’s willingness to leverage its control over the Strait of Hormuz to exert economic pressure.

Potential for Mining and U.S. Response

Reports emerged on Tuesday suggesting that Iran had begun mining the Strait of Hormuz, a move that would further impede shipping. In response, President Trump announced that the U.S. Military had destroyed ten inactive Iranian mines. He also warned of “serious consequences” should Iran proceed with blocking the strait. Firstpost details the escalating exchange of threats and actions.

Broader Regional Impact and Humanitarian Concerns

Beyond the economic implications, the conflict is creating a mounting humanitarian crisis across the Middle East. The United Nations is warning of toxic black rain, mass displacement, and disrupted supply chains for essential goods. Large plumes of smoke have risen over Beirut following explosions in the city’s southern suburbs. Israel has also launched “large-scale” strikes in Lebanon after coming under attack from Hezbollah, an Iranian-backed militant group.

What to Expect: A Prolonged Conflict?

Given Israel’s firm commitment to achieving its objectives, as articulated by Defense Minister Katz, and the ongoing disruptions to vital shipping lanes, a swift resolution to the conflict appears unlikely. While President Trump has offered optimistic assessments at times, the reality on the ground suggests a prolonged period of instability. The situation remains highly fluid, and further escalation is possible, particularly if Iran continues to pursue its strategy of economic coercion through control of the Strait of Hormuz. The condition of Mojtaba Khamenei, Iran’s new supreme leader, following reported injuries in the initial strikes, also adds an element of uncertainty to the leadership dynamics within Iran.