Escalating US-Iran conflict drives oil and diesel to record highs
Intensifying military confrontation between the United States and Iran around the Strait of Hormuz has pushed energy prices to multi-year peaks, with Brent crude approaching $110 a barrel and US diesel exceeding $6 a gallon for the first time. Iran reported striking ten vessels during the week of 11 September, while the United States continued striking Iranian tankers and expanded economic pressure through new sanctions on banks accused of financing Tehran. The surge in fuel costs has become a political concern for the Trump administration, particularly affecting agricultural and transportation sectors in key electoral regions.
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The undeclared conflict between the United States and Iran, which began with American strikes on Iranian tankers in retaliation for attacks in the Strait of Hormuz, intensified on 11 September. Iranian state media reported that Iranian forces struck ten ships near Hormuz during the week, with two additional vessels hit off the coast of Oman on Friday morning, according to reports cited by CNBC and Bloomberg. The United States continued to target Iranian tankers and broadened its economic strategy: Treasury Secretary Scott Bessent announced sanctions against banks accused of channelling funds to Iran, including branches of an Egyptian bank in Dubai and reportedly one of Turkey's largest banks.
The economic impact of the conflict became evident this week. Brent crude approached $110 a barrel, a level not reached since the conflict began, while US diesel prices exceeded $6 a gallon for the first time in history. Financial outlets including CNBC linked these record prices directly to the fighting around Hormuz and ongoing disruption in Ukraine. President Donald Trump stated that the war would end "right after" November's midterm elections, though he later acknowledged to the Wall Street Journal that the conflict could extend beyond that date and suggested the possibility of strikes on facilities near Natanz.
The rising fuel costs have created political difficulties for the Trump administration. Several outlets noted that regions that previously supported Trump face particular exposure to diesel price increases, which disproportionately affect agriculture and long-haul trucking. Meanwhile, OPEC reduced its demand growth forecast for 2026, citing uncertainty from the conflict and its impact on global supply chains.
The dispute has widened to include neighbouring states. Jordan reported an attack on a military base linked to the conflict in September, according to Al Jazeera, demonstrating how the confrontation has expanded beyond the two principal combatants and now threatens regional stability across the Gulf and the Levant.
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