Iran War Puts Global Energy Markets on the Brink of a Worst-Case Scenario | WIREDSkip to main contentMenuSECURITYPOLITICSTHE BIG STORYBUSINESSSCIENCECULTUREREVIEWSMenuAccountAccountNewslettersSecurityPoliticsThe Big StoryBusinessScienceCultureReviewsChevronMoreExpandThe Big InterviewMagazineEventsWIRED InsiderWIRED ConsultingNewslettersPodcastsVideoLivestreamsMerchSearchSearchMolly TaftScienceMar 20, 2026 12:20 PMIran War Puts Global Energy Markets on the Brink of a Worst-Case Scenario“This will be so, so, so, so, so bad,” one analyst says.Photograph: REUTERSCommentLoaderSave StorySave this storyCommentLoaderSave StorySave this storyThe war in Iran reached a new extreme this week, as both Israel and Iran launched strikes on oil and gas production and export facilities. The attacks up the stakes in a war that was already choking energy and commodity markets, and will threaten the long-term health of the global economy. On Friday, the International Energy Agency recommended that people work from home, drive slowly, and use gas stoves sparingly in order to alleviate price shocks from the crisis.The situation in the Persian Gulf is so extreme, analysts told WIRED, that it’s almost unbelievable.“This scenario is something that you give to the first-year oil analysts to say, ‘OK, if this happens …’ It’s a really interesting illustrative educational thought experiment,” says Rory Johnston, a Canadian oil market researcher. “It’s kind of like, what would happen if gravity just suddenly stopped working for 10 minutes? The things you just give to students to say, ‘Let's put a thought experiment to something extreme and see how would the system react’? I never thought we would actually see this.”Ellen Wald, an energy and geopolitics consultant, agrees. “This is like one of those war game simulations in energy markets,” she says.The initial attacks on Iran earlier this month effectively closed off the Strait of Hormuz, one of the world’s most important shipping routes. The strait is the central lifeline for oil and gas exports from not only Iran, but other countries in the Middle East. The bulk of the Organization of the Petroleum Exporting Countries (OPEC), the world’s largest oil and gas cartel, use the strait to ship oil and gas out of the region to customers. The strait is also a critical hub for oil and gas byproducts like industrial chemicals and fertilizer. Closure of the strait sent shocks through the global economy: After the initial attacks, oil prices shot up above $100 per barrel for the first time since Russia’s invasion of Ukraine in 2022.“Anytime there is any kind of military activity in the Persian Gulf or even in the Middle East, oil markets tend to get very jittery,” says Wald; closing the strait was a sign that this war could have much more extreme impacts than other conflicts. But for the first few weeks, the oil production facilities themselves remained mostly untouched. “No oil and no products were getting out, and some countries don't have enough storage, and so they were shutting down production simply because they couldn't store the oil,” says Wald. “But that's the kind of thing that can be fairly quickly reversible.”Over the past few days, however, missile strikes have started heavily targeting oil and gas infrastructure. On Thursday, Israel launched a series of strikes on various oil and gas facilities in the region, most notably the South Pars gas field, the world’s biggest natural gas field, which is jointly controlled by Iran and Qatar. Iran retaliated with counterstrikes, including on the world’s largest LNG export facility in Qatar. Oil prices temporarily shot up to nearly $120 a barrel.These strikes appear to have damaged infrastructure that’s crucial to the world’s fossil fuel supply. Qatar produces around 20 percent of the world’s liquefied natural gas (LNG) supply. The CEO of QatarEnergy, the state-owned oil and gas company, told Reuters that strikes had taken out 17 percent of its capacity for the next five years, and that the company will have to declare force majeure on contracts with countries in Europe and Asia due to the damage.“Once you get into the point where real long-term damage is happening, it's not going to be so easily reversible,” says Wald. “Once the conflict ends, we could still see a period of sustained higher oil prices simply because of the loss of production.”If the war drags on and energy facilities keep being targeted, it’s hard to overstate how devastating its ripple effects could be to the global economy. The head of the International Energy Agency told the Financial Times on Friday that the war represented the greatest threat to global energy supply “in history,” and said that financial markets were underestimating the impact of the conflict.Johnston points out that the amount of oil and gas that could be taken off the table is roughly the same amount of demand that was shed during the initial global shutdown in 2020 from the pandemic.“If the strait does not reopen, people are like, ‘Is this recessionary?’ I'm like, ‘No, it's depressionary.’ This will be so, so, so, so, so bad,” he says. “We're talking about Covid-level demand loss, no cars on the road, no planes in the sky, but with no pandemic.”Wald stresses that the US is not in danger of losing oil and gas supply. However, Americans will soon feel the effects of the war, most directly at the pump.“The majority of the price of a gallon of gasoline is determined by the price of a barrel of crude oil,” she says. High gas prices will also increase the price of trucking goods around the country: “This is the kind of thing that gets translated into higher prices at the grocery store,” says Wald.The war doesn’t just affect energy: Crucial global commodity supplies have been choked off by the conflict, from petrochemical production to materials used in semiconductor manufacturing. The prices of different kinds of fertilizer, which are in high demand due to the start of spring planting season in the US, have soared due to crucial supplies being unable to make it out of the gulf. Some airlines have begun raising fares and cutting flights because of high fuel costs.A lot of the uncertainty that markets are facing right now, both Wald and Johnston say, comes from inconsistent messaging from the White House. It’s unclear just how long the Trump administration expects this war to go on, if there’s any sort of exit plan, or indeed what exactly the aims of the war are. The administration has already put in place some emergency measures aimed at alleviating the price of the war for US consumers, from temporarily waiving the Jones Act to considering removing sanctions on Iranian crude. (Following a meeting with oil producers Thursday, the administration did reiterate that it would not be implementing a US export ban.)But Trump also said Thursday that if Iran retaliates further against Qatar, the US would take further action.“NO MORE ATTACKS WILL BE MADE BY ISRAEL pertaining to this extremely important and valuable South Pars Field unless Iran unwisely decides to attack a very innocent, in this case, Qatar,” the president wrote in a post on Truth Social. “In which instance the United States of America, with or without the help or consent of Israel, will massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before.”“I never thought we would be this deep into this,” Johnston says. “I don't think Trump ever thought we would be this deep into this.”CommentsBack to topTriangleYou Might Also LikeIn your inbox: Upgrade your life with WIRED-tested gearNvidia plans to launch an open-source AI agent platformBig Story: He built the Epstein database—it consumed his lifeShould you leave your phone charging overnight?Watch: How right wing influencers infiltrated the governmentMolly Taft is a senior writer for WIRED, covering climate change, energy, and the environment. Previously, they were a reporter and editor at Drilled, an investigative climate multimedia reporting project. Before that, they wrote about climate change and technology for Gizmodo, and served as a contributing editor for the New ... Read MoreSenior Writer, ClimateTopicsIranEnergyoilIsraelDonald TrumpwarRead MoreTrump’s War on Iran Could Screw Over US FarmersThe Middle East supplies a huge amount of the world’s fertilizer. Conflict in the region has sent prices soaring ahead of the critical spring planting season.Molly TaftWhat Happens If Iran Shuts Down the Strait of Hormuz?The Strait of Hormuz is one of the most sensitive pressure points in the global economy. Conflict in Iran could put it at risk indefinitely.Carla SertinHow the Iran War Could Jack Up Prices on Store ShelvesThe Strait of Hormuz, a busy waterway off the coast of Iran, has come to a near standstill. 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And then there’s a really bad way.Rebecca HeilweilThe US Had a Big Battery Boom Last YearDespite Donald Trump’s unrelenting attacks on renewable energy, there’s a quiet revolution happening on US grids.Molly TaftWIRED is obsessed with what comes next. Through rigorous investigations and game-changing reporting, we tell stories that don’t just reflect the moment—they help create it. When you look back in 10, 20, even 50 years, WIRED will be the publication that led the story of the present, mapped the people, products, and ideas defining it, and explained how those forces forged the future. WIRED: For Future Reference.More From WIREDSubscribeNewslettersLivestreamsTravelFAQWIRED StaffWIRED EducationEditorial StandardsArchiveRSSSite MapAccessibility HelpReviews and GuidesReviewsBuying GuidesStreaming GuidesWearablesCouponsGift GuidesAdvertiseContact UsManage AccountJobsPress CenterCondé Nast StoreUser AgreementPrivacy PolicyYour California Privacy Rights© 2026 Condé Nast. 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The ongoing war in Iran, marked by recent escalatory actions involving Israel and Iran targeting oil and gas infrastructure, represents a significant and potentially catastrophic event for global energy markets. As described by analysts, this scenario is exceptionally concerning, resembling an extreme thought experiment typically used to illustrate system responses under duress. Rory Johnston, a Canadian oil market researcher, aptly characterizes it as “something that you give to the first-year oil analysts to say, ‘OK, if this happens …’”. Ellen Wald, an energy and geopolitics consultant, notes the situation is akin to a war game simulation, highlighting the immediate threat to the Strait of Hormuz, a critical artery for global oil and gas exports managed by the Organization of the Petroleum Exporting Countries (OPEC). This waterway’s closure, already precipitated by initial attacks, triggered immediate price spikes exceeding $100 per barrel, a level not seen since Russia’s invasion of Ukraine in 2022. The immediate shockwaves extended beyond oil, impacting global commodity supplies, including petrochemicals and semiconductor materials, and causing a surge in fertilizer prices due to disrupted supply chains. The potential for sustained higher oil prices, stemming from lost production capacity, is a significant concern, particularly given Qatar’s substantial contribution – approximately 20% – to the world’s liquefied natural gas (LNG) supply. Damage to infrastructure, as exemplified by Qatar's reported 17% capacity loss, diminishes the likelihood of a swift recovery. The situation is compounded by a lack of definitive strategic clarity from the White House, with inconsistent messaging regarding the conflict’s duration and objectives, further amplifying market uncertainty. While the US isn’t directly reliant on Iranian oil and gas, the impact on global prices will undoubtedly influence consumer costs, particularly at the pump and in the broader economy. The International Energy Agency has issued dire warnings, deeming this the “greatest threat to global energy supply in history,” suggesting the potential for a recessionary impact if the crisis persists. Johnston emphasizes the potential for disruption equivalent to the demand shock experienced during the 2020 COVID-19 pandemic, anticipating a severity beyond a typical economic downturn. Wald underscores the extended timeline for recovery, noting that even with conflict resolution, lasting higher prices could result from the permanent loss of production capacity. The complexity of the situation is further heightened by the interconnected nature of commodity markets, impacting everything from transportation to manufacturing, showcasing the profound and potentially destabilizing ripples emanating from this geopolitical event.