The global oil markets have entered a phase of sharp fluctuations following the US-Israeli military attack on Iran on the morning of Saturday, February 28, 2026. Airstrikes targeted strategic sites in Tehran and other major cities, in what Israel described as a "preemptive attack" to eliminate what it considers an existential threat posed by Iran's nuclear and missile program. 

This escalation has prompted traders to reassess the risks to global energy supply, amid concerns about direct impacts on oil and gas movements in the Middle East, historically considered the world's energy lifeline.

The initial reaction in the markets was swift, with oil prices rising immediately as geopolitical risks priced in. Brent crude prices are predicted to rise to levels close to $80 a barrel, especially if the escalation continues for a long period, reflecting the market's sensitivity to any potential supply disruption. 

Concerns are particularly focused on the Strait of Hormuz, through which about one-fifth of the world's oil passes, making any threat to navigation a potential catastrophe for energy markets.

Oil facility in the waters of the Arabian Gulf. (Reuters)

Oil producers have moved swiftly to calm the markets, with the OPEC+ alliance expected to discuss production increases to offset any potential shortfall, especially after halting gradual increases for three months. Some major oil producing countries, like Saudi Arabia and the UAE, have already increased their exports in anticipation of any potential disruptions, in an attempt to ease pressure on prices. The effectiveness of these measures will remain tied to the extent and continuity of the military escalation, as further escalation waves could surpass any production increases and raise prices further.

At the same time, Israel has temporarily shut down parts of natural gas fields and wells in its territorial waters after internal security assessments. This decision impacts gas exports to neighboring countries such as Egypt, which has led authorities there to activate emergency plans to provide alternatives in case the shutdown continues. Meanwhile, in Iran, a large fire broke out in an industrial complex in the southern city of Abadan, increasing uncertainty about the stability of regional oil and gas supplies.

Strong rises in the metals markets are also predicted, with gold prices potentially reaching $5,400 per ounce, supported by investors' fear of escalating risks and geopolitical tensions. Investors have begun reevaluating their portfolios, particularly in the energy sector, considering new risk premiums associated with the disturbances in the Middle East.

In these days, charged with geopolitical tensions, oil markets face a crossroads; a rapid containment of tensions could lead to relative price stability after an initial rise, with a rebalancing of supply movements and global energy markets, while continued confrontation or renewed escalation will lead to a sharp rise in prices, driven by supply risks and increased transportation and insurance costs, with the possibility of reshaping the balance in the energy market in the medium term.

Aseel Al-Aranki is the Director of the Research and Analysis Department at RiverPrime