Middle East conflict set to drive oil and LNG prices significantly higher in Oil & Companies News 03/03/2026 US strikes at Iran’s leadership On Saturday 28 February, the US and Israel launched attacks against Iranian government, military and nuclear targets. The Iranian Supreme leader, Ayatollah Al-Khamenei, was killed on Saturday along with senior leaders of the Iranian Defence Council. The process of succession is now underway, but the attack represents an existential threat to the current Iranian political and military structure and its leadership. President Trump is advocating the Iranian people to “take over your government”. Iran has retaliated with missile/drone strikes targeting Israel and US military bases across the GCC region. There have been civilian casualties in Iran and across the region and the US has also acknowledged military casualties and damaged infrastructure. The US has indicated it hopes for a swift resolution and negotiations are understood to be beginning with the Iranians, mediated by Oman. There is also a grave risk of that conflict escalates. Attacks on or damage to energy infrastructure are limited so far. Kharg Island, the main export location for Iranian crude and condensate, was reportedly struck, but the specific target is understood to be its naval facility. The Strait of Hormuz is a key maritime traffic route, and its closure presents a major risk of disruption to global oil and gas/LNG markets. Iran is reported to have warned shipping not to traverse the Strait of Hormuz. Tanker traffic through this waterway has effectively ceased for the time being, after insurance coverage was withdrawn over the weekend. There are also reports of vessels in the Strait being attacked, with the tanker Skylight on fire and its crew evacuated. We analyse the implications for energy prices should flows of crude, refined oil products and LNG into global markets be disrupted and corporate exposure to the region. Middle East conflict: oil market implications The Strait of Hormuz is the artery through which about 15% of global oil supply flows, primarily crude and condensate, but also petrochemical feedstocks, jet fuel and diesel/gasoil. The loss of these exports to the global oil market will be significant; the key question is how long before vessels are free to re-establish export flows. Even in the most optimistic scenario – one in which the Iranian regime elects to co-operate with the US – it is plausible that it still takes a few weeks for export flows to fully be re-established. During that time, oil prices are heavily risked to the upside. In the early days of the Russia/Ukraine conflict, the market’s fear of the potential loss of 3 million b/d of Russian exports drove the oil price from around US$80/bbl to over US$125/bbl before it became clear supplies were largely unimpaired. In this conflict the stakes are higher still with 15 million b/d of Gulf crude and product exports under threat. Failure to quickly re-establish flows through the Strait of Hormuz could again drive prices well over US$100/bbl from Friday’s close under US$73/bbl (Brent). Middle East producers have alternative egress routes that could partially mitigate a prolonged closure of the Strait of Hormuz. Saudi Arabia could increase exports via its East-West pipeline to the Red Sea which has 1 – 2 million b/d of spare capacity. Additional volumes can be supplied into the Mediterranean from Iraq. Higher prices will incentivise upstream producers elsewhe