Global Energy Markets in Freefall as Iran War Enters Third Week
The Iran war just became everyone’s problem. On Thursday, March 19, oil prices exploded to $118 a barrel as the U.S.-Israeli bombing campaign and Iran’s widening retaliatory strikes sent global energy markets into a tailspin not seen since the 2008 financial crisis.
European natural gas prices surged as much as 30 percent overnight. Stock markets from Tokyo to London cratered. And the Trump administration — which launched Operation Epic Fury less than three weeks ago — is now scrambling to prevent the very energy crisis its war unleashed from spiraling out of control.
Treasury Secretary Scott Bessent appeared on Fox Business Thursday morning with a remarkable concession: the United States may “unsanction the Iranian oil” already in transit — roughly 140 million barrels — and could release additional supplies from America’s Strategic Petroleum Reserve.
It was a stunning pivot for an administration that has spent years squeezing Iran’s oil exports with maximum-pressure sanctions. Now, the same oil it tried to keep off the market is desperately needed to keep global prices from hitting $150 a barrel.
The Gulf Burns: Qatar, Kuwait, Saudi Arabia, and UAE All Hit
Iran’s strategy has become brutally clear: if its own energy infrastructure is targeted, everyone’s energy infrastructure burns.
The escalation began Wednesday when Israel struck South Pars — the world’s largest natural gas field, shared between Iran and Qatar. Iran’s response was immediate and devastating.
Qatar: Iranian strikes damaged the Ras Laffan terminal, the world’s largest liquefied natural gas (LNG) facility. Qatar is the world’s top LNG exporter, and damage to Ras Laffan sent European gas futures into a panic.
Kuwait: Drone attacks ignited fires at two state-owned refineries.
Saudi Arabia: A drone landed at a key energy export terminal — a haunting echo of the 2019 Aramco attack, but this time during an active war.
UAE: Officials confirmed incidents at gas facilities and an oil field caused by debris from missile interceptions. Smoke plumes were visible near Dubai International Airport as recently as March 16.
Iran’s message to the Gulf states is unmistakable: you are not bystanders in this war.
$200 Billion and Counting: The Pentagon’s War Bill Grows
While Bessent scrambled on the economic front, the military price tag landed with a thud. The Pentagon has requested an additional $200 billion in funding for the Iran war, according to a military official and an administration official who spoke to the Washington Post.
“Obviously, it takes money to kill bad guys,” Defense Secretary Pete Hegseth said when asked about the figure at a Thursday press briefing. He added that the number “could move” — a comment that sent shivers through fiscal hawks on Capitol Hill.
Hegseth projected confidence on the military front, claiming U.S. forces have struck over 7,000 targets in Iran since February 28. He said more than 120 Iranian navy ships have been damaged or sunk, and Iran’s military ports are “crippled.”
“We’re winning decisively and on our terms,” Hegseth told reporters.
But the numbers tell a more complicated story. The Strait of Hormuz — through which roughly 15 percent of the world’s oil supply flows — has been effectively closed since March 4, when Iranian forces declared it shut and began attacking ships attempting to transit. About 90 vessels have managed to cross since the war began, according to the Associated Press, but regular commercial shipping remains paralyzed.
The Strait of Hormuz: A Global Chokepoint Under Siege
The closure of the Strait of Hormuz is being described as the largest disruption to the global energy supply chain in modern history. Brent crude first broke $100 a barrel on March 8 and has been climbing ever since, peaking at $126 before settling around $118 on Thursday.
Energy analyst Bob McNally warned that if the crisis continues on its current trajectory, crude could exceed its 2008 record of $147 a barrel — a scenario he called a “nightmare” for the global economy.
The ripple effects are already being felt far beyond the Middle East:
Asia: The Philippines has mandated four-day work weeks to conserve fuel. Indonesia is burning through reserves that analysts say could last only weeks. Japan’s Nikkei index fell more than 3 percent Thursday.
Europe: French President Emmanuel Macron blasted the strikes on energy infrastructure as “reckless,” warning that destroying production facilities would leave economic damage lasting far longer than the war itself. European stock markets opened sharply lower, with the STOXX 600, FTSE 100, and DAX all falling more than 2 percent.
United States: Gas prices at the pump are surging, and the Department of Agriculture is expected to announce relief measures for farmers facing skyrocketing fertilizer costs.
Military Escalation: Deeper Strikes, Russian Drones, and a New Supreme Leader Wounded
On the battlefield, the war is intensifying — not winding down.
CENTCOM Commander Admiral Brad Cooper confirmed that U.S. warplanes are now pushing deeper into Iranian territory than at any previous point in the conflict. Strikes have expanded from neutralizing immediate missile threats to targeting Iran’s “wider manufacturing apparatus” and defense industrial base.
Recent operations include:
– 5,000-pound bunker-buster bombs dropped on an anti-ship cruise missile site along the Iranian coastline near the Strait of Hormuz
– Strikes on a military depot in Yazd Province associated with IRGC missile command infrastructure and torpedo manufacturing
– A drone facility hit in South Khorasan Province — one of the easternmost strikes of the war
– Israel struck the IRGC Navy headquarters in Tehran on March 16
– Israel confirmed the assassination of Basij militia commander Gholamreza Soleimani — the highest-profile killing since the war’s early days
Perhaps most significantly, Director of National Intelligence Tulsi Gabbard told the House Intelligence Committee Thursday that Mojtaba Khamenei — Iran’s new Supreme Leader who took power after his father Ayatollah Ali Khamenei was killed in early strikes — was “badly injured” in an Israeli attack. Gabbard said that given his injuries, decision-making at the top of the Iranian government is “unclear.”
The revelation raises profound questions about who, if anyone, is in control of Iran’s war machine — and who would negotiate an end to the fighting.
U.S. and Israel: Same War, Different Goals
Cracks in the U.S.-Israeli alliance are becoming harder to ignore.
In her House testimony, Gabbard made a striking admission: Israel’s goals in the Iran war are different from America’s. While the U.S. is focused on destroying Iran’s missile capabilities and naval forces, Israel is conducting a targeted assassination campaign against Iranian military and political leadership.
The divergence became acute Wednesday when Israel struck the South Pars gas field — triggering Iran’s retaliatory blitz across the Gulf. President Trump quickly distanced himself, saying Israel “acted alone” in striking the gas field. He then threatened to destroy South Pars entirely if Qatar’s energy facilities were attacked again — a threat that seemed aimed as much at deterring Israel from further energy strikes as at warning Iran.
Trump’s call for allied nations to send warships to help secure the Strait of Hormuz has been met with “little enthusiasm,” according to the BBC. He later reversed course, claiming the U.S. didn’t actually need their help.
Meanwhile, Joint Chiefs Chairman Dan Caine confirmed that American warplanes are pressing deeper into Iran, striking naval drones, missiles, and launchers along the Hormuz coastline — suggesting the U.S. military is preparing for a long campaign to reopen the strait by force.
Iran’s Calculation: Internationalize the Pain
Iran cannot match the combined firepower of the United States and Israel. Its air force is outclassed. Its navy is being systematically destroyed. Its military leadership is being picked off one by one.
But Tehran has found a weapon that may prove more potent than any missile: the global economy.
By closing the Strait of Hormuz and retaliating against Gulf energy infrastructure, Iran has turned the war from a bilateral military conflict into a global economic crisis. The World Economic Forum noted that Iran is “internationalizing the costs of war by targeting energy, shipping, commercial and civilian infrastructure across the Gulf.”
The strategy is working. Three weeks into Operation Epic Fury, the U.S. is being forced to unsanction Iranian oil, release strategic reserves, and watch helplessly as its Gulf allies suffer attacks the Pentagon cannot fully prevent.
What Comes Next
As the war enters its fourth week, several critical questions loom:
Can the U.S. reopen the Strait of Hormuz? The military is clearly trying, with bunker-buster strikes targeting coastal missile sites. But Iran has shown it can strike shipping from multiple angles — including with Russian-produced Shahed drones.
Will the energy crisis force a ceasefire? With oil potentially heading toward $150 a barrel and European allies openly furious, the economic pressure for a negotiated end is mounting daily.
Who controls Iran? With Mojtaba Khamenei reportedly “badly injured” and multiple senior commanders killed, the chain of command in Tehran is murky at best. This makes both escalation and negotiation dangerously unpredictable.
How will Congress respond? The $200 billion funding request will face intense scrutiny, especially as the war’s economic fallout hits American wallets.
One thing is certain: this war is no longer just about missiles and military targets. It’s about oil, gas, and the global economy — and right now, no one is winning.
This is a developing story. Check back for updates as the situation evolves.