Why Global Conflicts Often Send Oil and Gas Prices Soaring

Global fuel prices have long been closely linked to geopolitical conflicts, particularly when wars involve major oil-producing regions or critical transport routes. History shows that when energy supply is threatened, oil markets react quickly, often pushing petrol and diesel prices higher for consumers.

One of the earliest and most dramatic examples occurred during the 1973 oil crisis, when members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo after the Yom Kippur War. Within months, global oil prices quadrupled, causing widespread fuel shortages, long queues at petrol stations, and a surge in inflation across Western economies.

A similar pattern emerged during the 1990 Gulf War, when Iraq invaded Kuwait. Because both countries were major oil producers, markets feared large-scale supply disruptions. As a result, oil prices surged within weeks, highlighting how quickly geopolitical risk can move energy markets even before actual supply shortages occur.

More recently, the Russia–Ukraine war in 2022 triggered another global energy shock. Russia, one of the world’s largest producers of oil and natural gas, faced sanctions and export disruptions, which caused oil prices to climb sharply and natural gas prices to surge across Europe. The spike in energy costs contributed to global inflation and forced governments and central banks to respond to rising fuel bills.

Today, attention has shifted to the Iran–Israel conflict, which has renewed concerns about global fuel prices due to the Middle East’s central role in energy supply. The region produces millions of barrels of oil per day, and any escalation raises fears that production or transport infrastructure could be disrupted.

One of the biggest concerns for traders is the Strait of Hormuz, a strategic shipping route between Iran and Oman. Approximately one-fifth of the world’s oil shipments pass through the strait each day, meaning that any disruption could significantly tighten global supply and push crude prices higher.

Even without direct supply disruptions, market psychology often plays a major role. Energy traders tend to price in geopolitical risk early, which means oil prices can rise simply on the possibility of escalation.

Because crude oil is the largest component of petrol and diesel costs, higher oil prices usually translate into higher fuel prices at the pump. However, the long-term impact depends on several factors, including whether supply is actually disrupted, how long the conflict lasts, and whether other producers increase output to stabilise markets.

Read more about how oil price movements influence global industries and the AI revolution, and why energy markets remain one of the most sensitive sectors to geopolitical risk.