Oil Prices Surge as Iran-Israel Conflict Escalates

Oil prices experienced a significant surge on Thursday, March 5, 2026, after Iran claimed to have attacked a tanker, exacerbating fears of wider regional conflict and disruptions to global oil supplies. West Texas Intermediate (WTI) crude oil broke above $79 per barrel, rising 6.86%, or $5.12, to $79.78 per barrel by 11:30 a.m. ET. The global benchmark, Brent crude, increased by 4.31%, or $3.51, to $84.91 per barrel. This week alone, oil prices have risen by more than 17%.

Iran’s Actions and Regional Tensions

Iran’s Revolutionary Guard previously ordered a closure of the Strait of Hormuz and threatened attacks on tankers traversing the vital waterway, according to state media reports. The Strait of Hormuz, a critical chokepoint for global oil trade, sees approximately 15 million barrels of crude oil shipped through it daily, representing around 20% of the world’s oil supply (AP News) and (Telesur English).

A large explosion occurred at a tanker anchored in Iraqi territorial waters on Thursday, as reported by the British Navy. The ship’s master observed a tiny vessel fleeing the scene. Fortunately, the crew was unharmed, and no fires were reported.

Disruptions to Tanker Traffic

Tanker traffic through the Strait of Hormuz has largely come to a standstill since the escalation of the conflict between the U.S.-Israel and Iran, as ship owners express concerns about the volatile security situation. This disruption threatens to slow or halt the supply of oil from Iran and other Middle Eastern nations.

U.S. Response and Potential Escort Measures

President Trump announced on Tuesday that the U.S. Will provide political risk insurance for tankers passing through the Strait of Hormuz. He likewise indicated the U.S. Navy would escort ships through the Persian Gulf if necessary. However, the White House press secretary, Karoline Leavitt, stated on Wednesday that there is no current timeline for when the strait will be safe for commercial shipping again (AP News).

Impact on Oil Prices

The surge in oil prices reflects traders’ bets on reduced oil supply from the Middle East. West Texas Intermediate (WTI) crude rose 8.69% to US$77.42 a barrel on Tuesday following the U.S.-Israeli military offensive against Iran (Telesur English). Brent crude, the international standard, was trading at $79.41 per barrel early Monday, up 9% from its trading price of $72.87 on Friday, a seven-month high (AP News).

Higher global energy prices are expected to translate to increased costs for consumers at the pump and for groceries and other goods, particularly impacting those already facing elevated inflation.

Key Takeaways

• Oil prices have surged over 17% this week due to escalating tensions between Iran and the U.S.-Israel.
• The Strait of Hormuz, a critical oil chokepoint, has seen tanker traffic come to a standstill.
• The U.S. Is considering providing insurance and potential naval escorts for tankers.
• Higher oil prices are expected to contribute to increased consumer costs.