Energy Market Impacts from the United States and Iran Attacks | Advisor Pulse

On June 23, Iran launched missile strikes on the U.S. Al-Udeid military base in Qatar in retaliation for the weekend’s U.S. attacks on Iranian nuclear facilities. While this marks a significant escalation of the Iran and Israel conflict, the strikes were widely anticipated and caused no U.S. casualties or damage to energy infrastructure. As a result, markets are interpreting the move as a controlled response rather than a signal of broader escalation.

At the close of the market on June 23, 2025, crude oil prices are down more than $5 per barrel, with West Texas Intermediate (WTI) falling below $70. Similarly, diesel prices are experiencing a decline, down more than 17¢ per gallon. This sharp pullback suggests the market is reassessing the immediate risk of supply disruption and may be viewing Iran’s response as an opportunity for de-escalation rather than a catalyst for further conflict.

Why aren’t crude oil prices spiking?

Despite the heightened risk environment, several factors are helping contain upward pressure on energy prices:

• No disruption to physical oil flows: The Strait of Hormuz—a chokepoint for nearly 20% of global oil—remains open. Iran has issued threats but has not acted to block or disrupt tanker traffic.
• Historical precedent: Past conflicts in the region, including the Gulf Wars and Russia’s invasion of Ukraine, have shown that even sharp price spikes tend to be short-lived unless supply is physically disrupted.
• Spare production capacity: OPEC+ holds an estimated 5.7 million barrels per day in spare capacity, with Saudi Arabia and the UAE accounting for the majority. This buffer helps reassure markets that any supply gap could be filled quickly.
• Alternative export routes: Both Saudi Arabia and the UAE have pipelines that bypass the Strait of Hormuz, reducing the risk of a total supply chokehold.
• Market fatigue and improved efficiency: Energy markets have become more resilient to geopolitical shocks. Improved energy efficiency and diversified supply chains have muted the inflationary impact of oil price swings compared to previous decades.

Crude and diesel price trends from the Israel and Iran conflict

Since Israel’s initial airstrikes on June 13, U.S. WTI crude oil prices have risen by roughly 10%, reaching a peak above $75 before settling near $74 per barrel. National wholesale diesel prices have also climbed in response, increasing by 10.6% overall and now averaging approximately 330.1¢ per gallon.

What to monitor in an unpredictable global market

Although markets are currently stable, conditions remain highly dynamic. A direct attempt by Iran to block the Strait of Hormuz or to strike major oil infrastructure in the Gulf could lead to a rapid and sustained surge in global energy prices. That said, the probability of a full-scale blockade remains low. Iran depends heavily on the same waterway for its own oil exports, and any attempt to close or disrupt shipping lanes would likely provoke an immediate and forceful response from the U.S. Navy, which maintains a strong regional presence. These factors collectively serve as a deterrent to more extreme escalation—at least in the near term.

Stay prepared for fuel market changes

Diesel and crude markets are currently pricing in risk but aren't showing signs of panic. Unless physical supply is disrupted, volatility is likely to remain contained. Still, the potential for escalation remains, and shippers should stay alert to sudden changes in fuel costs.

Staying informed about market dynamics is essential for building resilient and cost-effective transportation strategies. By leveraging Fuel Recovery, shippers can reimburse carriers based on real-time fuel costs and protect their bottom line from market fluctuations. Learn more about Fuel Recovery today!