Israel launched a wave of attacks on Iran in the early hours of Friday morning, targeting senior military commanders, nuclear scientists and nuclear sites but reportedly also killing civilians.
As the countries traded airstrikes, oil prices soared on Friday to their highest levels since 2022, threatening global economic turbulence.
Instability caused by the conflict saw oil prices skyrocket as trading closed on Friday.
The US oil benchmark, West Texas Intermediate crude, finished at $72.98 a barrel, up 7.6 per cent after jumping at one stage to 14 per cent.
Oil prices hit their highest level in nearly five months (Photo Ufuk Celal Guzel/Getty Images)
Prices at the pump
Iran is a member of the Organisation of the Petroleum Exporting Countries (OPEC), producing around 3.3 million barrels of oil and fuel per day and exporting over 2 million.
Israeli officials are briefing that Iran’s oil network could come under attack, which could have a devastating impact. A source told the Times of Israel the response would aim to cause “significant financial damage”.
Emergency and rescue workers inspect a scene of heavily damaged buildings after an overnight strike on 14 June 2025 in Rishon LeZion, Israel.(Photo: Amir Levy/Getty Images)
Under a worst-case scenario, analysts at investment bank JPMorgan said that closing the Hormuz Strait or a retaliatory response could lead to prices surging to the $120 to 130 (£88.70 to £96.09) a barrel range, nearly double their current base case forecast.
Heating bills this winter
The impact may not filter through to households at all, given the way the market works, including the role of the regulator, in capping prices.
Many people heat their homes with gas, and in the UK electricity prices are set in relation to the gas price. If the flow of liquified natural gas (LNG) from the region is impacted, experts warn this could effect costs.
Other economists have cautioned that rising oil and gas prices, which lead to economic uncertainty, could influence future decisions on interest rate cuts or even tax rises being considered by Chancellor Rachel Reeves for later this year.
Could other products rise in price?
Experts fear that the Iran-Israel conflict could see renewed attacks on ships, disrupting global trade and increasing product prices.
Many ships took lengthy detours to avoid the areas, causing some delays and an increase in shipping costs.
The oil tanker Marlin Luanda on fire after an attack, in the Red Sea in January 2024. (Photo: Indian Navy via AP)
The Combined Maritime Force said that shipping was so far was continuing through the Strait of Hormuz – a vital trade passage – but that some shipowners were looking to avoid the region.
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“The fragile US-brokered ceasefire with the Houthis in Yemen now hangs in the balance – potentially unravelling if the group is mobilised to act on Iran’s behalf,” she said.
The first ship sunk by a Houthi attack, in early March last year, was a British-owned vessel, and the UK has been involved in airstrikes on Houthi bases in Yemen.
Farea Al-Muslimi, research fellow at Chatham House, predicted that strikes in the Red Sea would likely resume, saying that the Houthis were “known for their recklessness”.
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