Energy Impact from the Israel-Iran Conflict
Jun 17, 2025
Written by Adam Lovgren, Energy Refined Fuels and Operations Manager
The recent strikes by Israel on Iranian energy infrastructure have added a new layer of volatility to global oil markets, and U.S. consumers are likely to feel the effects at the pump soon.
Key Developments:
Bottom Line:
If tensions continue to rise — particularly if Iran retaliates or threatens the Strait of Hormuz — oil markets could see significant turmoil. While current gasoline prices are relatively low, the potential for a sharp increase is real, especially if the conflict escalates or disrupts shipping lanes.
The recent strikes by Israel on Iranian energy infrastructure have added a new layer of volatility to global oil markets, and U.S. consumers are likely to feel the effects at the pump soon.
Key Developments:
- Israeli Strikes: Over the weekend, Israel targeted major Iranian energy assets, including:
- South Pars, one of the world’s largest natural gas fields.
- Tehran’s main gas depot.
- And other oil refineries.
- Oil Prices:
- U.S. crude prices jumped 11% last week, prompting concerns about rising fuel costs.
- As of Monday, oil was trading around $74 per barrel, though prices were fluctuating due to uncertainty about Iran’s response.
- Impact on Gas Prices:
- The recent oil price surge could push U.S. gasoline prices up by about 20 cents per gallon in the coming weeks.
- Gas prices are currently averaging $3.14 per gallon, down from $3.45 this time last year.
- Strait of Hormuz Threat:
- Iran controls the northern side of this strategic chokepoint through which about 20% of the world’s oil passes.
- Any disruption — even temporary — could send oil prices soaring by $8 to $31 per barrel, according to ClearView Energy Partners.
- While Iran has economic reasons not to block the strait (as it relies on it for oil exports to China), further escalation could shift those calculations.
- Even though the U.S. imports less oil from the Persian Gulf than in the past, the global nature of oil pricing means that Americans are still vulnerable to international disruptions.
- New U.S. oil production wouldn’t immediately offset a price spike, as it could take months to bring new wells online.
Bottom Line:
If tensions continue to rise — particularly if Iran retaliates or threatens the Strait of Hormuz — oil markets could see significant turmoil. While current gasoline prices are relatively low, the potential for a sharp increase is real, especially if the conflict escalates or disrupts shipping lanes.