March 10, 2026

US-Iran Conflict Sends Shockwaves Through Global Energy Markets
Oil, LNG, and refined products surge as supply disruptions ripple across global energy systems

The escalation of the US-Iran conflict has introduced a level of volatility across global energy markets not seen in several years. The primary driver has been the tightening of crude oil supply, which is cascading through related energy markets worldwide. A key focal point is the Strait of Hormuz, through which the oil equivalent of 20% of globally consumed liquid petroleum products typically transit. Since the onset of the conflict, cargo traffic through this critical shipping lane has largely stalled, creating significant supply constraints. As a result, crude oil prices have increased by more than 60%, with upward pressure continuing as the conflict persists.

Global LNG prices have also risen sharply as QatarEnergy, the world’s largest single LNG export facility, has fully shut down and will not begin to restart until a full resolution is reached. Other exporting facilities, like those in the US and Australia, are seeing elevated demand as European and Asian countries look to other sources to replenish depleted gas storage after an especially cold winter. US export facilities have already been running at full capacity, but there is a chance they will begin delaying maintenance shutdowns and ramp up the deployment of new facilities to meet increased demand.

US natural gas markets have seen elevated volatility, with “sympathy” reactions to oil market volatility, as seen in the 10% increase in the April futures contract since the start of the conflict. There is potential for sustained gains if global LNG prices remain elevated into the summer and prompt US facilities to delay maintenance, leading to increased exports during a period when the US is typically focused on refilling its own winter storage. Conversely, if elevated oil prices persist and US oil producers begin to ramp up production, natural gas supply would rise slightly due to its presence in oil reservoirs, putting some downward pressure on natural gas prices.

Another major ramification of the conflict has been rising prices in petroleum markets. As crude oil becomes more expensive and refiners deplete existing inventory, their input costs of production are rising. Additionally, several large Middle Eastern refineries that serve global demand have shut down, causing a significant supply crunch for essential refined products consumers rely on, such as gasoline, jet fuel, and fuel oils.

Summary

The conflict in Iran has had significant impacts on global petroleum markets. Its impact on US natural gas markets has been more moderate, and its impact on US electricity markets remains relatively limited, with only modest increases in near-term pricing.

Although the situation remains fluid and further market changes are sure to occur, these are the impacts as of this writing. Tradition Energy will continue to monitor price impacts and will revise this document as additional information becomes available.

 

For more information about this or other developing regulatory matters that may affect your energy supply costs please contact your Tradition Energy Advisor.