Updated March 2, 2026 at 5:04 PM CST
Global crude oil prices briefly surged past 9% late Monday, and stocks fell temporarily as the war with Iran continued its third day.
Brent crude, the global benchmark, was trading in the high $70s on Monday morning following the effective halt of tanker traffic through the Strait of Hormuz.
That's a sharp rise from before the U.S. and Israel attacked, but far from a worse-case scenario.
"The crude market is extremely measured," says Rebecca Babin, an energy trader at CIBC Private Wealth. "I don't see panic out there."
Analysts have warned that prices could top $100 a barrel if oil trade is disrupted for a prolonged period of time, or if the war spills over into neighboring countries and destroys oil infrastructure. Saudi Arabia says it has shot down drones targeting an oil refinery, while Qatar Energy says two natural gas facilities have been attacked.
Stock markets declined initially but pared losses as investors shifted to wait-and-see mode. The Dow Jones Industrial Average fell as much as 600 points at one point on Monday morning but ended down just over 70 points, while the S&P ended flat.
Gasoline prices likely to rise; natural gas spikes
Global energy markets were closed on Saturday when the U.S. and Israel attacked Iran. When oil trading opened on Sunday night, prices briefly topped $80 a barrel before settling slightly.
Patrick de Haan, an analyst with the app GasBuddy, estimates that in the next few days the spike in crude oil prices will push U.S. gasoline prices up by 10-30 cents on average, with some individual stations seeing prices rise as much as 85 cents.
About 20% of global oil consumption passes through the Strait of Hormuz. Four vessels have been hit in Gulf waters since the conflict began; with shipping companies and their insurers concerned about vessel safety, tankers are not risking passage through the strait.
Meanwhile, the strait is also a key chokepoint for trade of liquefied natural gas, or LNG — the natural gas that's used to heat homes and make electricity, loaded into ships for easier global trade. European natural gas markets have surged more than 20%, but spot prices in the U.S. remain within their recent range.
After recent investments in LNG terminals, the U.S. is the world's largest exporter of LNG. Higher prices boost companies that send natural gas overseas, but contribute to rising electricity costs in the U.S.
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Why aren't oil prices higher?
Iran has often threatened to close the Strait of Hormuz, but never made good on the promise. Today's complete halt of oil flows through that bottleneck is unprecedented.
"We have not seen anything like this in pretty much the history of the Strait of Hormuz," says Claudio Galimberti, the chief economist at the research firm Rystad Energy. He compares it to blocking the aorta in a circulatory system.
"It's a very big deal," he says.
So why aren't prices up even more?
Babin, the energy trader, says that there are a few big reasons. One is that markets have recently been oversupplied with oil, allowing countries to fill their stockpiles. China, in particular, has plenty of oil in storage both on land and floating offshore. That means the world is well-positioned to weather a short-term disruption in oil flows. (European natural gas stockpiles, in contrast, are depleted right now, one reason for a bigger price reaction there.)
But more fundamentally, traders like her are weighing the possibility that this conflict might be resolved quite quickly.
"Traders are seeing this through a slightly different lens, a shorter term lens," she says. "We've had geopolitical risks that come and go very quickly."
If the conflict stretches on past a few weeks, though, things could look very different.
"There are buffers — strategic reserves, rerouted cargoes, elevated floating inventories," Angie Gildea, the U.S. energy strategy leader at accounting giant KPMG, wrote in a note emailed to NPR, "but those are stopgaps."
The critical variable is the duration of the conflict, she wrote.
OPEC+ pushes more barrels out
Over the weekend, the influential energy cartel OPEC+ met and agreed on a production increase that is even larger than expected. In a normal market, that would be expected to push prices down. But right now, all eyes are on Iran.
In fact, the question of OPEC production boosts could be "an entirely moot point," energy analyst Helima Croft of the bank RBC wrote in a research note, because of the lack of a sea passage to get large portions of that oil to market.
"The lion's share of OPEC barrels in the region could essentially become stranded assets in an extended war scenario," she writes. In fact, Iraq might have to "shut in" production — stop making oil from its fields — if it can't access the Strait of Hormuz to export the barrels it makes.
Notably, Iran has not had to implement a full naval blockade of the strait to achieve an effective halt in ship traffic. Instead, it has deployed "selective drone and rocket attacks," as Croft puts it.
That's been enough for shipping companies — and the insurers who underwrite them — to balk at the risk of sending ships through the strait, resulting in the total halt of tanker traffic.
NPR's Rafael Nam and Aya Batrawy contributed to this report.
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