Oil flows through Strait of Hormuz dry up
Death toll rises as Israel and Iran continue to trade missile fire
Nathalie Thomas, Oliver Ralph, Jonathan Wheatley, Julian Vickers, Peter Wells, Kieran Cash, Orla Ryan and Eli Meixler
Main developments
Iran lashed out with waves of missiles and drones at Israel and America’s allies in the Gulf on Sunday to avenge the killing of its supreme leader Ayatollah Ali Khamenei, as the US and Israeli forces intensified their ferocious bombing campaign against the Islamic republic.
As the Middle East was thrust into its widest war in decades, the conflict has severely disrupted shipping in the oil-rich Gulf and is expected to drive up energy prices when markets reopen after the weekend.
Main developments:
- Israel and Iran continued to trade fire on Sunday, with Iranian drone and missile barrages setting off sirens across Israel. The Israeli military said it was carrying out strikes on regime targets in Tehran.
- Shipping through the Strait of Hormuz, a critical waterway for global energy supplies, has slowed to a near standstill after insurers warned they would cancel policies and raise premiums.
- At least 45 people have been reported killed on Sunday across the region.
- The US military said three of its soldiers were killed and five seriously wounded, the first reported American casualties.
- Donald Trump declared satisfaction with the progress, said the campaign was ahead of schedule and dismissed concerns about any impact on energy prices.
- Trump also said, “I will be talking” to new Iranian leadership, without giving more details, and that nine Iranian naval vessels had been sunk.
- Opec+ is to raise oil output in a bid to calm markets after Iran’s supreme leader Ayatollah Ali Khamenei was killed in joint US-Israeli air strikes.
- Iran’s top Revolutionary Guards commander Major General Mohammad Pakpour was also killed, local media reported.
- Ports in Dubai and Oman have been hit by drones as Iran has launched missile and drone barrages at Gulf states.
Oil jumps 10% on Iran conflict and could spike to $100 a barrel, analysts say
Oil jumps 10% on Iran conflict and could spike to $100 a barrel, analysts say
By Seher Dareen and Dmitry Zhdannikov March 1, 2026
Summary
- Brent jumps to $80 a barrel in over-the-counter trade
- Gulf oil flows disrupted after US and Israeli attacks on Iran
- OPEC+ agrees to raise output by 206,000 bpd
- Saudi Arabia and UAE raise exports, sources say
LONDON, March 1 (Reuters) - Brent crude jumped 10% to about $80 a barrel over the counter on Sunday, oil traders said, while analysts predicted that prices could climb as high as $100 after U.S. and Israeli strikes on Iran plunged the Middle East into a new war.
The global oil benchmark has rallied this year and reached $73 a barrel on Friday for its highest since July, buoyed by growing concern over the potential attacks that arrived a day later. Futures trading is closed over the weekend.
"While the military attacks are themselves supportive for oil prices, the key factor here is the closing of the Strait of Hormuz," said Ajay Parmar, director of energy and refining at ICIS.
Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway. More than 20% of global oil is moved through the Strait of Hormuz.
"We expect prices to open (after the weekend) much closer to $100 a barrel and perhaps exceed that level if we see a prolonged outage of the Strait," Parmar said.
Middle East leaders have warned Washington that a war on Iran could lead to oil prices jumping to more than $100 a barrel, said RBC analyst Helima Croft. Rabobank analysts slightly less bullish, seeing prices holding above $90 a barrel in the near term.
The OPEC+ group of oil producers agreed on Sunday to raise output by 206,000 barrels per day (bpd) from April, a modest increase representing less than 0.2% of global demand.
While some alternate infrastructure could be used to bypass the Strait of Hormuz, the net impact from its closure would be a loss of 8 million to 10 million bpd of crude oil supply even after diverting some flows through Saudi Arabia's East-West pipeline and Abu Dhabi's pipeline, said Rystad energy economist Jorge Leon.
Rystad expects prices to rise by $20 to about $92 a barrel when trade opens.
The Iran crisis also prompted Asian governments and refiners to assess oil stockpiles and alternative shipping routes and supplies. Kpler analysts said in a webinar on Sunday that India might turn to Russian oil to make up for potential Middle East supply loss.
Reporting by Seher Dareen and Dmitry Zhdannikov Editing by David Goodman and Alex Lawler
Oil tankers pass through the Strait of Hormuz, December 21, 2018. REUTERS/Hamad I Mohammed/File Photo Purchase Licensing Rights, opens new tab
