There is an old military saying that “no plan survives first contact with the enemy,” and it appears that Iran may have ignored this rule in its response to the recent attacks by the United States and Israel. These attacks, along with similar strikes carried out last year, can be viewed as an extension of the war that Iran effectively launched through Hamas’ deadly attacks on Israel on October 7, 2023. In any case, several unexpected factors are now emerging that could threaten to prolong disruptions in the Middle East for years to come, with oil, gas, and gasoline prices rising significantly.

Iran’s new leader, who closely resembles his predecessor, has encouraged this situation by maintaining the effective blockade of the Strait of Hormuz, through which roughly one-third of global oil supplies and about one-fifth of liquefied natural gas shipments pass. At the same time, Iran has said the world should be prepared for oil prices reaching $200 per barrel while its forces target commercial shipping. But is that outcome likely?

Difficulty dealing with the Strait of Hormuz

Solving the main problem — the effective closure of the Strait of Hormuz — appears nearly impossible at this stage of the conflict, given the operational constraints under which US President Donald Trump wants American forces to operate.

A senior source in Washington working closely with the US Treasury Department said that Trump does not want to deploy troops on the ground around the strait, which is the only realistic option for guaranteeing safe passage for ships. The source added that sending naval vessels to escort commercial ships would still leave them vulnerable to drone attacks and missile strikes from Iran, as well as fast boats from the Revolutionary Guard. Even before that, the US Navy would have to clear naval mines in the area.

The official said the Trump administration is working on a plan to secure the strait that includes providing insurance for ships through the US International Development Finance Corporation, but no final proposals or specific timeline have yet emerged.

Increasing supplies from other sources

In the absence of reopening this vital route for global oil supplies, efforts will shift toward increasing supplies from other sources. Several solutions have already begun to be implemented, similar to the measures taken after Russia’s invasion of Ukraine in 2022, when Brent crude rose to more than $120 per barrel, a level it approached again following the recent attacks on Iran.

One effective strategy at that time was releasing strategic oil reserves from member countries of the International Energy Agency (IEA). Last week, the agency recommended releasing 400 million barrels, far exceeding the previous five largest releases combined, the largest of which was 180 million barrels split into two tranches in 2022.

US Energy Secretary Chris Wright said Trump has authorized the release of 172 million barrels from the US Strategic Petroleum Reserve starting next week. However, some member countries cannot release their reserves immediately, and it could take up to 120 days for the full additional volume to reach the market.

Sanction waivers for oil consumption

Another mechanism to increase global supply involves granting temporary exemptions allowing some countries to use energy from sanctioned producers. In 2022, this approach was applied to oil from sanctioned Venezuela, and enforcement was also relaxed for Iranian oil. Now, after the removal of Nicolás Maduro from Venezuela’s presidency in January, Venezuelan oil can be used more freely by the United States, although volumes remain limited after years of decline in the country’s oil sector.

At present, Russia is likely to be the main beneficiary, as the US Treasury Department issued a temporary 30-day exemption, expiring on April 11, 2026, allowing some countries, including India, to purchase sanctioned Russian oil. Russia has also indicated it is ready to resume exports of natural gas and liquefied natural gas to countries affected by the Iranian conflict, including those that depend on Qatari gas. Nevertheless, this increase will not fully offset the ongoing losses caused by the halt of oil shipments through the Strait of Hormuz.

Potential impact on prices

Given the ongoing volatility of the conflict, it is impossible to determine the exact scale of lost oil supply on a consistent basis. However, the World Bank has previously estimated the price impact of supply disruptions. According to its estimates:

A small disruption: supply losses of 500,000 to 2 million barrels per day, similar to the 2011 Libyan civil war, could raise prices by 3–13%, bringing Brent to around $75–$82 per barrel after it had stood at $73 before the latest attacks.

A medium disruption: supply losses of 3 to 5 million barrels per day, comparable to the 2003 Iraq war, could push prices up by 21–35%, to around $88–$98 per barrel.

A major disruption: supply losses of 6 to 8 million barrels per day, similar to the 1973 oil crisis, could drive prices up by 56–75%, to roughly $113–$127 per barrel.

The World Bank did not factor in the effective closure of the Strait of Hormuz, but Vikas Dwivedi, chief energy strategist at Macquarie Group, believes such a scenario could trigger a chain of events that might push prices to $150 per barrel or more.

The political dimension in the United States

For Trump, the key issue is how these figures affect the US economy and the prospects of both himself and the Republican Party in the midterm elections on November 3, as well as in the upcoming presidential race. Historical data indicate that every $10 increase in the price of a barrel of oil typically leads to a rise of about 25–30 cents in the price of a gallon of gasoline, resulting in more than $1 billion in lost annual consumer spending for each one-cent increase in gasoline prices.

Trump is known to be determined to avoid dragging the United States into a prolonged conflict that cannot be won, as happened with Russia in Ukraine. He has previously pledged to end “endless wars,” a stance that has resonated with his political base. A short conflict could be justified as serving US national security interests, but he understands that any prolonged confrontation would likely erode support among the voters on whom he relies.

A senior source in the European Union said that Trump initially set four clear objectives for the attacks on Iran, and that within the next two to three weeks he is expected to declare that they have broadly been achieved, while continuing to monitor Iran’s nuclear program, missile capabilities, and regional militias. The source added that the United States would intervene again only if it sees a direct threat, and would otherwise withdraw.

Overall, the prospect of oil reaching $200 per barrel, as suggested by Iran, still appears unlikely. International measures and alternative supply sources could help limit excessive price increases, despite continued tensions surrounding the Strait of Hormuz.

Copper futures traded near the $5.7 per pound level, maintaining the decline recorded over the past two weeks. According to Trading Economics data, the strength of the US dollar and rising US Treasury yields continued to exert downward pressure on metals.

Market participants are assessing escalating geopolitical tensions following military operations targeting a major oil export site, which pushed oil prices higher and raised uncertainty about supplies. The possibility of launching a multinational initiative to secure navigation through a vital maritime shipping route is also being considered, a step that could affect energy markets and international trade.

Prices are also facing additional pressure from concerns about demand in China, where a slowdown in construction projects is affecting metal consumption.

In addition, rising energy costs and higher inflation have reduced expectations of interest rate cuts by the Federal Reserve and other central banks, posing an additional challenge for non-yielding assets.

Bitcoin rose above the $74,000 level on Monday, recording its highest level in about six weeks, driven by a wave of short-covering despite continued investor caution due to escalating geopolitical tensions in the Middle East.

The world’s largest cryptocurrency was trading 3.4% higher at $73,892.4 as of 02:21 Eastern Time (06:21 GMT), after earlier rising to $74,336.9 during the session.

Bitcoin jumped 6% over the past week despite declines in global equity markets as rising oil prices fueled inflation concerns.

Cryptocurrencies rise on short covering

Cryptocurrency markets rose broadly as traders who had bet on further declines rushed to cover their positions.

Data from CoinGlass showed that total liquidations in the cryptocurrency market reached about $344 million over the past 24 hours, with short liquidations accounting for about 83% of the total.

Liquidations occur when traders using leverage are forced to close their positions after prices move against them, often amplifying market movements.

Despite the rebound, market sentiment remained cautious as the conflict in the Middle East enters its third week, raising concerns about global energy supplies and inflation.

US President Donald Trump had called on US allies to help secure the strategic Strait of Hormuz, a vital route for global oil shipments, as fighting in the region continues.

Oil prices remain above $100 per barrel amid war with Iran

Media reports indicated that despite repeated statements by US authorities that Iran’s military capabilities had been destroyed, drone attacks in Gulf countries continued on Monday.

Oil prices also remained supported above the $100 per barrel level amid concerns about supply disruptions around the Strait of Hormuz, a key shipping route for global crude exports.

US stock futures rose slightly during Asian trading on Monday ahead of the Federal Reserve’s monetary policy meeting later this week, where policymakers are widely expected to keep interest rates unchanged while assessing inflation risks.

Analysts said geopolitical uncertainty and macroeconomic risks could keep cryptocurrency markets volatile in the near term, even as short covering supports prices in the short term.

Altcoins rise… Ethereum jumps 8%

Most alternative cryptocurrencies also rose on Monday amid a broader recovery in the digital asset market.

The world’s second-largest cryptocurrency, Ethereum, jumped 8% to $2,265.88.

In contrast, the third-largest cryptocurrency, XRP, fell 5% to $1.48.

Oil prices showed mixed performance on Monday, with global benchmark Brent rising slightly while US crude declined, amid attacks targeting oil production facilities in the Gulf and calls by US President Donald Trump for international efforts to secure shipping through the Strait of Hormuz.

Brent crude futures rose by 16 cents to $103.30 per barrel as of 11:37 GMT, while US West Texas Intermediate crude fell by $1.50, or 1.5%, to $97.21 per barrel.

Both contracts had surged more than 40% this month to their highest levels since 2022 after US-Israeli strikes on Iran prompted Tehran to halt shipping through the Strait of Hormuz, a vital waterway through which about one-fifth of global oil and liquefied natural gas supplies pass.

Two sources told Reuters on Monday that oil loading operations had resumed at Fujairah port in the United Arab Emirates after earlier being halted following a drone attack that caused a fire in the emirate’s petroleum industrial zone.

Fujairah port is located outside the Strait of Hormuz and serves as an export outlet for about 1 million barrels per day of the UAE’s main Murban crude, a volume equivalent to about 1% of global oil demand.

The International Energy Agency said on Thursday that the war in the Middle East is causing the largest disruption to oil supplies in history, while major producers such as Saudi Arabia, Iraq, and the United Arab Emirates have reduced production levels.

Tamas Varga, oil analyst at PVM Oil Associates, said investors appear to realize that if just two weeks of disruption in the Strait of Hormuz have already caused this level of damage to production, exports, and refining operations, the consequences of a prolonged conflict would be severe, especially with inventories continuing to decline.

Analysts at ING said on Monday that US strikes over the weekend on Kharg Island raised supply concerns, given that most Iranian oil exports pass through the island.

Although the strikes appeared to target military facilities rather than energy infrastructure, they still pose risks to supplies since Iranian oil is almost the only oil currently passing through the Strait of Hormuz, according to the bank.

Over the weekend, Trump threatened additional strikes on Kharg Island, which handles about 90% of Iran’s oil exports, after military sites there were targeted, prompting Tehran to respond in kind.

Trump said on Sunday that he is asking other countries to help protect this vital energy corridor, adding that Washington is holding talks with several countries about securing the strait.

In the same context, British Prime Minister Keir Starmer said on Monday that the United Kingdom is working with its allies on a collective plan to reopen the Strait of Hormuz and restore freedom of navigation in the Middle East, though he acknowledged that the task will not be easy.

Trump said the United States is also in contact with Iran but expressed doubts that Tehran is ready to engage in serious talks to end the conflict.

For its part, the International Energy Agency said on Sunday that more than 400 million barrels of oil reserves will soon begin entering the market in what will be the largest-ever release from strategic stockpiles aimed at countering the price surge caused by the Middle East war.

The agency added that inventories from Asia and Oceania will be released immediately, while supplies from Europe and the Americas will become available by the end of March.

Pierre Meyerson of SEB Bank said that as the conflict enters its third week, the absence of a clear end has increased global market concerns about the possibility of an uncontrolled escalation.

However, US Energy Secretary Chris Wright said on Sunday that he expects the war to end within the next few weeks, with oil supplies recovering and energy costs declining afterward.