Escalating US-Iran conflict and disruptions to regional supplies raise concerns over prolonged pressure on global energy markets

Brent crude oil prices climbed above $105 a barrel on Thursday, reaching their highest level since May 19, as escalating tensions in the Middle East fuelled concerns about prolonged disruptions to global energy supplies.

Brent crude, the international benchmark, rose 4% to $105.24 a barrel by 8:57 a.m. ET. US West Texas Intermediate futures gained 4.4% to $100.27 a barrel, reflecting growing concerns over the impact of the conflict on regional oil production and shipping routes.

Iran has signalled that it will continue retaliatory strikes if US attacks persist, while Iran-backed Houthi forces have targeted Saudi assets and threatened shipping routes. The developments have heightened fears that the conflict could further disrupt oil supplies from the Middle East.

Saudi Arabia’s crude oil production also fell sharply in August 2026, declining by around 1.9 million barrels a day to 6.238 million barrels a day, its lowest level since 1990.

The deteriorating regional situation has weakened expectations that oil supplies can quickly return to normal. Asian economies may also be forced to re-enter global energy markets as inventories built up since the start of the conflict become increasingly important.

China imported 8.93 million barrels per day of crude oil in August, up 6.2% from July. Its reliance on inventories since the beginning of the conflict has helped shield the global economy from a deeper energy shortage caused by tanker blockades in the Persian Gulf.

Oil prices have now risen sharply as the US-Iran conflict enters its seventh month, with markets showing increasing concern over the absence of a clear resolution.

For Pakistan, the surge in international crude prices could create additional pressure on consumers. Petrol and diesel prices are already at relatively high levels, while a sustained increase in global oil prices could push domestic fuel prices higher.

Higher petroleum costs could increase transportation and production expenses across the economy and raise electricity generation costs. They could also add to inflationary pressures, placing further strain on household budgets and businesses.

With energy costs playing a significant role in Pakistan’s economy, continued volatility in international oil markets could pose further challenges to inflation and overall economic stability.