By Arezki Daoud: This morning, I spent a little more money on gasoline at the pump in Miami, but I admit I expected to pay much more. And so as I wondered why the energy sector has not imploded, I did some research on how that sector is reacting to the war in Iran. For now, it is evident, setting aside the hugely disrupted air traffic and tourism sectors in the Mideast, oil and natural gas are responding faster than almost any other economic indicator. These two charts below show how traders are currently interpreting the American and Israeli strikes on Iran and the possibility of a broader regional conflict.
The oil market has already reacted. The most obvious one is U.S. crude oil prices surging toward $90 per barrel, a significant move amid escalating geopolitical tensions in the Gulf region. All other data I checked suggest that geopolitics, with the Strait of Hormuz chokepoint, is the culprit, not an immediate physical supply shortage. Any escalation involving Iran automatically introduces the possibility that shipping through Hormuz could become more dangerous, more expensive, or temporarily disrupted. Tanker insurance costs rise, shipping companies adjust routes, and energy traders begin to add a risk premium to prices.
Crude Oil WTI Prices as of 7 March 2026
The oil chart appears to show that the market is pricing a geopolitical risk premium rather than a collapse in supply. Oil has moved sharply higher, but the increase remains within a range that suggests traders still believe the conflict could remain contained.
Now onto the natural gas chart, which tells a slightly different story. European natural gas prices, represented by the TTF benchmark, are currently around €50 per megawatt-hour. That level is elevated compared to the period before the Ukraine war, but it remains far below the extraordinary spike seen in 2022 when Russian pipeline gas supplies to Europe collapsed.
European Natural Gas Prices as of March 7, 2026
At first glance, the gas market appears relatively calm. There is no dramatic spike comparable to the one visible in the oil chart. But this apparent calm hides a structural vulnerability that has emerged in the global energy system since 2022.
Before the Russian invasion of Ukraine, Europe relied heavily on pipeline gas from Russia. When those flows declined, Europe replaced much of that supply with liquefied natural gas imports from the United States, Qatar, Algeria, and other exporters. LNG now plays a much larger role in Europe’s energy system. Of course, that shift has made Europe far more dependent on global shipping routes.
And once again, those routes pass through the Persian Gulf. A significant share of the world’s LNG exports, particularly from Qatar, also moves through the Strait of Hormuz. If the conflict with Iran were to escalate in a way that affects maritime security in that corridor, LNG shipments could become more expensive, perhaps delayed, or even restricted. The consequences would first be seen in European and Asian gas prices.
For now, the gas chart suggests that traders do not believe such a disruption is imminent. Storage levels in Europe remain relatively comfortable, and LNG flows continue without major interruption. But the market is clearly aware that the risk exists.
And so these two charts suggest that energy markets are currently pricing a limited escalation scenario. Traders appear to believe that oil exports from the Gulf will continue, that shipping lanes will remain open, and that LNG supplies will keep moving toward Europe and Asia. As long as those assumptions hold, energy prices may stabilize near current levels.
But energy markets are extremely sensitive to shifts in geopolitical probability. If the conflict remains contained, oil prices may fluctuate between roughly $80 and $95 per barrel, while European natural gas remains in the range seen on the chart. In that scenario, the economic impact would be manageable. Energy costs would rise modestly but would not trigger a new global inflation shock.
If the conflict lasts or expands across the Gulf, however, the situation changes quickly. Greater risk to tanker traffic, rising insurance premiums, or limited disruptions to shipping could push oil prices toward $100 per barrel or higher. Natural gas prices would likely follow, particularly in regions dependent on LNG imports.
The most disruptive scenario would involve direct interference with maritime traffic in the Strait of Hormuz. Even partial disruption could send energy markets sharply higher, tightening global supply and raising costs across transportation, electricity generation, manufacturing, and agriculture.
Energy prices are the primary channel through which geopolitical conflicts spread into the global economy. Higher oil prices increase transportation costs and raise the price of fuel, fertilizers, and food. Higher natural gas prices drive electricity costs and affect industrial production.
For that reason, energy markets are often the earliest warning system for broader economic stress.
At the moment, the signal coming from oil and natural gas is that markets are reacting to risk, not yet to a supply shock. In other words, the global energy system is not yet in crisis. But we’re only in the first week of a crisis that could last longer. Plus the geography of energy supply means that the line between stability and disruption runs directly through the Persian Gulf. And as long as the conflict involving Iran continues, that line will remain one of the most important fault lines in the global economy.
