What began as a military conflict has rapidly evolved into an economic nightmare. Oil prices have already crossed $100 per barrel, and Iran’s Revolutionary Guards have threatened to push them to $200 if Israeli strikes on Iranian energy facilities continue — a prospect that would send shockwaves through every corner of the global economy.
Israeli airstrikes hit at least five fuel storage sites in and around Tehran, killing four oil workers and blanketing the Iranian capital in thick, black smoke. The scale of the destruction was visible from across the city, and the images of burning oil facilities transmitted around the world were enough on their own to rattle energy markets.
Gulf states bore the brunt of Iran’s retaliatory strikes. Saudi Arabia shot down 15 drones and saw two civilians killed in a residential strike. Bahrain’s desalination infrastructure sustained damage. A US service member died from injuries suffered during an Iranian attack in Saudi Arabia, lifting the American death toll to seven.
Iran’s new supreme leader, Mojtaba Khamenei — appointed by the clerical assembly following his father’s death — inherited a country at war on multiple fronts, with internal divisions between a president seeking to limit Gulf strikes and military factions determined to continue them. That friction was on full display when the president’s public apology to Gulf states was effectively undermined by continued Iranian military operations hours later.
The United States worked to steady markets, pledging restraint on Iranian energy targets and predicting only short-term supply disruptions. But with Iran responsible for roughly four percent of world oil output and no ceasefire in sight, the economic stakes of this conflict were growing by the hour.