U.S.-Israeli Conflict With Iran Sends Oil Prices Soaring

Rising energy costs could lead to higher gasoline prices in the U.S.

Mar. 13, 2026 at 3:03pm

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The U.S.–Israeli war with Iran has brought significant volatility to global energy and equity markets. Oil prices climbed from about $65 per barrel before the conflict to a peak of $119 on March 9, before easing to around $100. If disruptions to Middle Eastern oil supplies continue, analysts warn the effects will likely translate into higher gasoline prices in the United States.

Why it matters

The Middle East remains a key supplier of global energy, with most shipments passing through the Strait of Hormuz. As long as Iran retains the capability to disrupt shipping, analysts expect markets to remain highly sensitive to developments on the battlefield. Higher oil prices could lead to noticeably higher gasoline prices in the U.S. within weeks.

The details

Pipelines in Saudi Arabia and the UAE offer alternatives to shipping through the Strait of Hormuz, but their capacity is limited. The U.S. administration has pledged to provide military escorts and insurance guarantees for tankers, and the International Energy Agency plans to release 400 million barrels of oil from its reserves. However, U.S. oil companies cannot ramp up production quickly enough to prevent temporary gas price hikes.

  • Oil prices climbed from about $65 per barrel before the conflict to a peak of $119 on March 9.
  • On March 11, the International Energy Agency announced plans to release 400 million barrels of oil from its reserves.

The players

Peter Earle

Director of economics and economic freedom at the American Institute for Economic Research.

Steve Milloy

Senior fellow at the Energy and Environment Legal Institute and a former adviser to the Trump administration.

Donald Trump

President of the United States.

America First Refining

A company that plans to begin construction this year on the first new U.S. oil refinery in half a century in Brownsville, Texas.

International Energy Agency

An organization established in 1974 to stabilize markets after the Arab oil embargo. Its members include the United States, Canada, Mexico, Japan, South Korea, Australia, and most European nations.

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What they’re saying

“In the near term, oil markets will likely remain dominated by risk premiums tied to shipping security and military developments in the Gulf.”

— Peter Earle, Director of economics and economic freedom at the American Institute for Economic Research

“There is no chance that U.S. oil companies can ramp up quickly enough to prevent temporary gas price hikes.”

— Steve Milloy, Senior fellow at the Energy and Environment Legal Institute and a former adviser to the Trump administration

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This conflict highlights the continued reliance on Middle Eastern oil and the vulnerability of global energy markets to geopolitical tensions. It could accelerate efforts to diversify energy production and distribution, creating opportunities for producers in the U.S. and South America, but also poses challenges for major importers like China.