With every military escalation in the Middle East, the price of a barrel of oil jumps, driven by the risk premium—especially amid threats targeting vital trade routes.
Oil markets remain captive to the trajectory of missiles more than to any traditional equations of supply and demand. With every military escalation in the Middle East, the price per barrel surges, driven by a risk premium—especially amid threats to vital shipping lanes. Today, oil is priced not only in barrels but by the rhythm of missiles and the shifting prospects of explosion or de-escalation.
The Middle East’s energy industry witnessed an unprecedented escalation on Wednesday, as Israel launched an attack on Iran’s South Pars gas field—the largest in the world—triggering swift Iranian retaliation against gas facilities in Qatar and a missile strike on Riyadh. The Israeli assault targeted a key source of revenue for Iran’s Revolutionary Guard, which has played a central role in suppressing domestic protests.
The attacks, which came amid a war that has been ongoing for three weeks, led to the closure of the Strait of Hormuz and drove up global energy prices, with Brent crude rising to around $110 per barrel and European gas jumping by 6%. Gulf states viewed the attacks as a threat to global energy security, and oil companies began evacuating facilities as a precautionary measure.
International reactions included statements by U.S. President Donald Trump, who threatened to completely destroy the gas field if Iran targeted Qatari facilities again, affirming that the United States had no prior knowledge of the Israeli attack on the Pars field.
In this context, experts suggested that the shutdown of production at the South Pars field could lead to a significant natural gas shortage, affecting Turkey and Europe and increasing risks for global markets. JPMorgan Bank projected a reduction in oil supplies by 12 million barrels per day — more than 10% of global demand — reflecting the scale of the crisis and its direct impact on the global economy and energy sector.