Oil Price 'Fear Premium' Surges Amid Iran Conflict

Analyst explains the return of the oil price "fear premium" and its impact on gas prices.

Mar. 15, 2026 at 1:53am

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Oil prices have spiked in recent weeks due to the return of the "fear premium" as tensions with Iran escalate. This fear premium, which can add $15-$20 to the price of crude oil, is caused by trader concerns that a conflict in the Middle East could disrupt oil flows through the Strait of Hormuz. The author, an energy policy expert, explains that most Americans don't understand the complex factors that go into determining oil and gas prices, and tend to simply blame the current president when prices rise.

Why it matters

The return of the fear premium in oil pricing is significant because it can lead to sharp increases in gas prices that directly impact consumers, even when underlying market fundamentals don't necessarily justify such price hikes. This highlights the outsized influence geopolitical tensions can have on global energy markets.

The details

The author recounts a past conversation where he explained the concept of the "fear premium" to a Texas state legislator. The fear premium refers to the additional $15-$20 per barrel that oil prices can rise due to trader concerns about potential supply disruptions, rather than actual changes in supply and demand. This translates to an extra 30-40 cents per gallon at the gas pump. The author notes that most Americans lack a deep understanding of the global factors that influence oil and gas prices, and tend to simply blame the sitting president when prices rise.

  • The fear premium has returned to oil prices over the last two weeks.

The players

David Blackmon

An energy writer and consultant based in Texas who spent 40 years working in the oil and gas industry, specializing in public policy and communications.

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What they’re saying

“Simple, it's the fear premium. That is the phenomenon in oil markets in which crude prices rise due to fear among traders that a conflict in the Middle East region could impact oil flows through the Strait of Hormuz. The market fundamentals don't really matter much during such times.”

— David Blackmon, Energy writer and consultant (dailycallernewsfoundation.org)

The takeaway

This case highlights the outsized influence that geopolitical tensions and trader psychology can have on global energy markets, even when the underlying supply and demand fundamentals do not necessarily justify such price swings. It underscores the need for greater public understanding of the complex factors that determine oil and gas prices.