Middle East Crisis: Oil Prices Fall Amidst Escalating Conflict & Iran Claims

March 20, 2026 – Escalating tensions in the Middle East are driving volatility in global energy markets and prompting international calls for de-escalation, as attacks expand beyond Iran and Israel to include neighboring states. Oil prices retreated slightly on Friday morning, following comments from Israeli Prime Minister Benjamin Netanyahu suggesting a potential swift resolution to the conflict, but remain elevated amid ongoing disruptions to regional energy infrastructure.

Brent crude, the international benchmark, was down 1.71% at $106.79 per barrel as of 06:15 GMT, after briefly surging to nearly $120 the previous day before moderating its gains. The fluctuations reflect the precarious security situation and the potential for further disruptions to oil and gas supplies.

The latest wave of attacks has broadened the geographic scope of the conflict. Israeli airstrikes targeted cities in the districts of Tyre and Bint Jbeil in southern Lebanon overnight, according to the Lebanese news agency Ani. Simultaneously, attacks on energy infrastructure have been reported in Kuwait, the United Arab Emirates, and Saudi Arabia. A drone attack on the Mina Al-Ahmadi refinery in Kuwait ignited a fire on Friday, forcing the shutdown of several units, while firefighters work to contain the blaze. The UAE and Kuwait reported intercepting incoming missiles, and Saudi Arabia announced it had intercepted multiple drones. Bahrain’s Interior Ministry reported damage to a warehouse caused by what it described as “Iranian aggression.”

Israel’s military announced further strikes on “infrastructure” belonging to Iranian authorities in Tehran via Telegram on Friday morning, signaling a continued escalation of direct attacks within Iran itself. These strikes follow Wednesday’s Israeli targeting of Iran’s South Pars gas field, a shared resource with Qatar, which prompted retaliatory missile attacks.

The disruption to energy infrastructure is raising concerns about global supply. The Ras Laffan LNG facility in Qatar sustained “extensive damage” in the initial Iranian strikes, raising risks to global gas supplies. The Strait of Hormuz, a critical chokepoint for oil tankers, has seen traffic significantly reduced, prompting international efforts to secure navigation through the vital waterway.

Six countries – France, Germany, Italy, the United Kingdom, the Netherlands, and Japan – have expressed their readiness to contribute to efforts to secure the Strait of Hormuz, though France, Germany, and Italy have stipulated that any such contribution would require a cessation of hostilities. French President Emmanuel Macron has suggested a potential United Nations framework for a future security mission in the region.

Amidst the escalating violence, European leaders meeting in Brussels have called for a “moratorium” on strikes targeting energy and water infrastructure. This appeal reflects growing concerns about the humanitarian consequences of the conflict and the potential for further destabilization of the region.

Prime Minister Netanyahu, in a statement on Thursday, claimed that Iran has lost the ability to enrich uranium and produce ballistic missiles. He further asserted that the war “will complete sooner than people think.” This assessment, however, contrasts with reports of ongoing attacks and the broadening geographic scope of the conflict.

The United States has been actively involved in diplomatic efforts to de-escalate the situation. U.S. Oil prices fell in extended trading on Thursday after Netanyahu stated that Israel was assisting the U.S. In reopening the Strait of Hormuz. Vice President JD Vance met with members of the U.S. Oil industry on Thursday, hosted by the American Petroleum Institute, where securing the Strait of Hormuz was identified as a “top priority.” Mike Sommers, API’s president and CEO, emphasized that “there is just no substitute right now” for maintaining open access to the waterway.

A White House official confirmed that oil and gas export restrictions are not currently under consideration, signaling a desire to avoid further exacerbating the energy market situation. However, the ongoing instability and the potential for further disruptions remain significant concerns.

Natural gas prices in Europe as well saw an increase, with the front-month price at the Dutch Title Transfer Facility (TTF) hub, a European benchmark, trading up over 11% at around 61 euros per megawatt-hour. This reflects the broader anxieties surrounding energy security in the region.

The situation remains highly fluid, and unpredictable. While Netanyahu’s comments offered a temporary respite in oil markets, the continued attacks and the potential for further escalation underscore the fragility of the region and the potential for prolonged disruption to global energy supplies. The international community’s efforts to secure the Strait of Hormuz and de-escalate the conflict will be crucial in the coming days and weeks.