London / New York – March 18, 2026 Crude oil and natural gas prices spiked sharply on Wednesday after reports emerged of the first direct attacks on Iranian oil and gas production infrastructure since the U.S.-Israeli military campaign against Iran began in late February. Brent crude futures jumped more than 4% to around $108 per barrel, while WTI climbed 1.7% to $97, and European and Asian natural gas benchmarks rose over 5% in early trading.
The move marks the steepest single-day gain for Brent since the initial outbreak of hostilities and pushes prices to levels not seen since the 2022 post-Ukraine invasion peak, underscoring how quickly energy markets are repricing a potential long-war scenario that could severely constrain global supply.
First Strikes on Iranian Production Assets
Iranian state-linked news agencies Fars and Tasnim reported Wednesday that U.S.-Israeli airstrikes hit several key oil and gas facilities, including refineries and processing plants. Emergency crews were deployed to contain fires, though initial assessments suggest damage was limited and no major export terminals (such as Kharg Island) were destroyed.
Earlier in the conflict, Israel struck a fuel depot in Tehran and the U.S. targeted military infrastructure on Kharg Island (Friday), but Wednesday’s raids represent the first confirmed hits on upstream and midstream production capacity. Analysts warn that even modest disruptions — or the credible threat of further strikes — are sufficient to keep risk premia elevated.
ING head of commodity strategy Warren Patterson wrote in a client note: “Energy markets are now forced to price in a prolonged interruption of oil and LNG flows through the Strait of Hormuz, with few signs of de-escalation or resumption of safe passage.”
Geopolitical & Supply-Side Triggers
Several converging factors fueled Wednesday’s rally:
- Iran’s retaliatory missile barrage Tehran launched fresh waves of ballistic missiles and drones at Israel overnight, killing two people in Tel Aviv from shrapnel and damaging multiple sites. The attack was billed as revenge for the assassination of two senior Iranian commanders earlier this week.
- Strait of Hormuz remains effectively closed to “enemy” traffic Iran continues its “friends vs. enemies” policy, selectively harassing or attacking tankers linked to the U.S.-led coalition. War-risk premiums have soared to levels not seen since the 1980s Tanker War.
- Iraqi Kirkuk exports offer only marginal relief Iraq resumed limited crude shipments (≈250,000 b/d) from Kirkuk fields via the Ceyhan terminal in Turkey after an agreement between Baghdad and the Kurdistan Regional Government. Traders described the restart as “a drop in the ocean” given Iraq’s pre-war output of ≈4.5 million b/d and the Strait’s daily throughput of ≈20 million barrels (≈20% of global seaborne oil).
- No meaningful spare capacity signal OPEC+ has been unable or unwilling to open taps significantly, while U.S. shale producers remain cautious amid uncertainty over how long high prices will persist.
U.S. Gasoline Prices Hit Two-and-a-Half-Year High
The global crude rally has transmitted rapidly to U.S. pump prices. The American Automobile Association (AAA) reported Wednesday that the national average for regular gasoline rose another 5 cents to $3.84/gallon — the highest level since September 25, 2023. Seven states now average $4 or more, with California, Hawaii, and Washington topping $5/gallon.
In just 18 days, U.S. pump prices have surged 86 cents (+29%), one of the fastest increases on record — comparable in percentage terms to the Hurricane Katrina shock of 2005, when Gulf Coast refining capacity was crippled.
Market Outlook & Analyst Targets
Major banks and trading houses updated forecasts this week:
- Goldman Sachs → 2026 Brent average raised to $102 (peak risk $135)
- JPMorgan → $108 average, with $140 in a prolonged closure scenario
- Morgan Stanley → $110–115 through Q3 2026
- Saxo Bank strategist Neil Wilson → “Positive news on Kirkuk volumes is welcome, but it’s nowhere near enough to offset Hormuz risk.”
Three scenarios now dominate desk discussions:
- Base (60%): $100–120 range through summer → persistent partial disruption + modest SPR releases
- Bull (30%): $130–160 → near-total Hormuz closure or direct hits on Saudi/UAE export facilities
- Bear (10%): sub-$95 → surprise ceasefire + large coordinated IEA stock draw
Broader Economic & Inflation Implications
The latest leg higher in energy prices threatens to re-accelerate global inflation just as central banks were beginning to declare victory:
- U.S. CPI energy component likely pushes headline inflation back toward 4% in Q2
- Eurozone HICP energy sub-index adds renewed upside pressure
- Emerging-market importers (India, Pakistan, Turkey, South Africa, Egypt) face widening current-account gaps and currency depreciation risks
- Airlines, shipping lines, and trucking firms → new round of fuel surcharges (15–35%) already announced
Until there is either (a) a credible multinational naval escort regime or (b) a verifiable de-escalation signal from Tehran, oil and gas markets are locked in “higher for longer” mode — with $100+ Brent increasingly viewed as the new baseline rather than the exception.