Oil and gas prices rapidly rise as Iran war shows no signs of letting up
[March 07, 2026] By
CATHY BUSSEWITZ
NEW YORK (AP) — The price of oil surged higher and showed no signs of
halting its rapid climb a week after the U.S. and Israel launched major
attacks on Iran that escalated into a war in the Middle East.
The conflict, in which nearly every country in the Middle East has
sustained damage from missiles or drone strikes, has left ships that
carry roughly 20 million barrels of oil a day stranded in the Persian
Gulf, unable to safely pass through the Strait of Hormuz, the narrow
mouth of the Gulf that is bordered on its north side by Iran.
The disruption and damage to key oil and gas facilities in the Middle
East has led to an interruption in the supply of oil and gas.
Oil prices surpassed $90 a barrel Friday, with American crude settling
at $90.90, up 36% from a week ago, and Brent, the international
standard, climbing 27% over the course of the week to land at $92.69.
The fallout is ratcheting up what consumers and business will pay for
gasoline, diesel and jet fuel, with some drivers already feeling it at
the pump.
“It’s crazy. It’s not needed, especially at a time when people are
already struggling, but not unexpected from all this turmoil that’s
going on,” said Mark Doran, who was pumping gas in Middlebury, Vermont
Friday. “I don’t think there’s been an end in sight to any Middle East
conflict that’s been started by us, so the fact that they say that
there’s going to be an end that quickly is not believable, and the
Middle East is, you know, a place that the U.S. is not going to solve.”
On Monday, President Donald Trump said that the U.S. expected its
military operations against Iran to last four to five weeks but has “
the capability to go far longer.” And on Friday, Trump appeared to rule
out talks with Iran absent its “unconditional surrender.”
“The more news we get, the more it seems like this is going to last a
really long time,” said Al Salazar, head of macro oil and gas research
at Enverus.
In the U.S., a gallon of regular gasoline rose to $3.32 on Friday, up
11% from a week ago, according to AAA motor club. Diesel was selling for
$4.33 a gallon Friday, up 15% from a week ago.
The price shocks were felt even more heavily in Europe and Asia, markets
that rely more heavily on energy supplies from the Middle East. Diesel
prices doubled in Europe, and jet fuel prices rose by close to 200% in
Asia, according to Claudio Galimberti, chief economist at Rystad Energy.
Energy prices climbed throughout the week as Iran launched a series of
retaliatory attacks, including a drone strike on the U.S. Embassy in
Saudi Arabia, and the conflict widened. Iran also hit a major refinery
in Saudi Arabia and a liquefied natural gas (LNG) facility in Qatar,
halting flows of refined products and taking about 20% of the world’s
LNG supply offline.
“We keep seeing news of vessels being hit or refineries or pipelines, so
the list is very long,” Galimberti said. As a result, roughly 9 million
barrels of oil per day are off the market because of facilities being
hit or producers taking precautionary measures, he said. “Right now,
with all of this shut in, we are in a situation of extreme deficit.”
The U.S. is a net exporter of oil, but that does not mean it is immune
to increases in the price of oil or gasoline, or that its producers can
just make up the difference.
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Gas prices are manually increased in Beverly Hills, Calif., Tuesday,
March 3, 2026. (AP Photo/Damian Dovarganes)
 Oil is traded on global markets, so
even the oil produced in the U.S. has risen in price based on what's
happening in the Middle East. And for many American oil producers,
"if you put more wells in the ground, there’s about a six-month lag
before you get that production uplift," Salazar said.
In addition, the U.S. can't simply turn all of its crude oil into
gasoline. That's because most of the oil produced in the U.S. is
light, sweet crude, and refineries on the East and West coasts are
primarily designed to process heavier, sour crude. As a result, the
U.S. exports some of its crude oil and imports some refined products
such as gasoline.
Jerry Dalpiaz of Covington, Louisiana, said he started filling up
his cars and gas cans on “the day that they announced that the
United States has started military operations against Iran" because
he assumed gas prices would climb.
“I can weather the storm because I’m in good financial position, but
I feel sorry for my fellow citizens who are living paycheck to
paycheck because they have to drive to get to work and they have to
change their oil and all those things,” Dalpiaz said. "And they need
some relief and it doesn’t seem to be coming anytime soon.”
Trump issued a plan Friday to insure losses up to approximately $20
billion in the Gulf region, aiming to restore confidence in maritime
trade, help stabilize international commerce and support American
and allied businesses operating in the Middle East.
But some energy experts said extra insurance won't solve the
problem.
“The problem is that in the oil trading, oil shipping world, people
are worried about counterterrorism,” said Amy Jaffe, director of the
Energy, Climate Justice and Sustainability Lab at New York
University, adding that they're worried about automated drone
speedboats, weapon-carrying, flying drones and mines or other
devices. "In order for the United States to create the atmosphere
that undoes the current bottleneck at the Strait of Hormuz, there
has to be some credible demonstration of solutions to the
counter-terrorism problem.”
Salazar wondered what the “new normal” would look like if the Strait
of Hormuz was effectively re-opened, and what effective security
would look like.
“All it takes is one individual with a RPG (rocket-propelled
grenade) to stand on the shore and take out a tanker, right?”
Salazar said. “And this is forever, do you know what I mean?”
___
Associated Press journalists Amanda Swinhart in Middlebury, Vermont,
Stephen Smith in Covington, Louisiana and Stan Choe in New York
contributed to this report.
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