The global energy crisis triggered by the Iran war reached a terrifying new milestone on Thursday as oil prices smashed back through $100 a barrel — and this time, the world’s largest-ever emergency reserve release couldn’t stop the bleeding.
Brent crude, the international benchmark, surged 9.3% to $100.50 per barrel on Thursday morning, while West Texas Intermediate jumped 8.8% to $94.92. The spike came after Iran set two oil tankers ablaze near the Iraqi port city of Basra in an overnight attack that killed at least one Indian crew member and forced Iraq to halt operations at its oil terminals.
The International Energy Agency delivered a stark warning: the war has caused “the largest supply disruption in the history of the global oil market,” with global supplies set to decrease by a staggering 8 million barrels per day. Oil traffic through the Strait of Hormuz — the chokepoint for a fifth of the world’s oil — has plummeted to what the IEA described as “a trickle.”
Record Reserve Release Fails to Calm Markets
In an unprecedented move, the IEA announced it would release 400 million barrels from its member nations’ reserves — the largest such release in the agency’s 50-year history. The United States separately announced it would tap 172 million barrels from its Strategic Petroleum Reserve.
But the markets weren’t buying it. Within hours of the announcement, fresh Iranian attacks on shipping sent prices surging right back above the $100 threshold, erasing any relief the historic reserve release had provided.
“The degree to which the IEA acted is being interpreted by some in the oil market as a signal that this conflict could drag on for months,” CNBC reported, capturing the grim mood among traders who had hoped the reserve release would provide a floor.
Goldman Sachs has warned that without a resolution to the Strait of Hormuz crisis, oil could reach $150 a barrel by the end of March. Iran’s military spokesperson Ebrahim Zolfaqari went even further: “Get ready for oil to be $200 a barrel, because the oil price depends on regional security which you have destabilized,” he said in comments directed at Washington.
Tankers Burning Off the Iraqi Coast
The latest escalation came in the early hours of Thursday when two oil tankers were attacked near the Iraqi port of Basra. The U.S.-owned crude oil tanker Safesea Vishnu, sailing under the Marshall Islands flag, was struck by what Indian maritime authorities described as a “white-colored unmanned speedboat carrying explosives” — an Iranian drone boat.
An Indian sailor was killed in the attack. India’s embassy in Baghdad confirmed that the remaining 15 Indian crew members were evacuated safely. A second tanker, the Maltese-flagged Zefyros, was attacked as it prepared to enter the port of Khor Al-Zoubair. Both vessels caught fire.
Iraq’s State Organization for Marketing of Oil (SOMO) confirmed both attacks but could not immediately determine whether they involved drone strikes or explosive-laden boats. The attacks forced Iraq — OPEC’s second-largest producer — to temporarily shut down its southern oil terminals, further choking global supply.
The total number of merchant ships hit since the war began on February 28 has now risen to at least 14, according to maritime security agencies. On Wednesday alone, three ships were struck in the Strait of Hormuz, including a Thai bulk carrier where three crew members remain trapped in the engine room after the vessel was hit by two projectiles.
Iran’s ‘War of Attrition’ Strategy
Senior Iranian officials have made clear they are pursuing a deliberate strategy of economic warfare. Iran’s Revolutionary Guards have declared they will not allow “a single liter of oil” through the Strait of Hormuz until the U.S. and Israeli bombing campaign stops.
The strategy is working — at least in economic terms. Hundreds of ships are blockaded behind the narrow channel along Iran’s southern coast, creating the worst disruption to energy supplies since the oil shocks of the 1970s. Saudi Arabia’s state oil company Aramco has warned of “catastrophic consequences” for global oil markets if the war continues to choke exports.
Iran has expanded its targeting beyond the Strait of Hormuz. On Wednesday, Kuwait said its air defenses shot down eight Iranian drones, while Saudi Arabia intercepted five drones heading toward its Shaybah oil field. Iran has also targeted Dubai’s international airport — the world’s busiest — in a dramatic escalation of attacks on civilian infrastructure.
The economic ripple effects are already being felt globally. Fears of stagflation — a toxic combination of weak economic growth and high inflation — are gripping financial markets. Economists have warned that if oil stays above $100 a barrel and the disruption continues, the world may face a stagflationary moment in the first half of the year.
Trump: ‘We Won’ But ‘Finish the Job’
President Trump has sent decidedly mixed signals about the conflict’s trajectory. Speaking at a rally in Hebron, Kentucky on Wednesday, he told supporters: “We won. In the first hour it was over.”
But he quickly pivoted: “We don’t want to leave early, do we? We got to finish the job. We don’t want to go back every two years.”
Trump claimed the U.S. had destroyed 58 Iranian naval ships and praised the “tremendous impact” of G7 coordination on the war. He also promised that oil tankers would soon “see great safety” passing through the Strait of Hormuz — but offered no specific details on how that would be achieved while Iran’s coastal missile batteries and drone fleets remain operational.
Israel’s defense minister, Israel Katz, struck a harder line, saying the campaign would continue “without any time limit, as long as required, until we achieve all objectives and win the campaign.”
Diplomatic Fallout Intensifies
The diplomatic consequences of the oil crisis are mounting rapidly. The UN Security Council passed a resolution demanding an immediate halt to Iranian attacks on Gulf states, passing 13-0. Oman has openly criticized the United States, with a senior official saying Washington would win fewer concessions from Tehran through war than negotiations.
Switzerland temporarily closed its embassy in Iran — the diplomatic post that typically serves U.S. citizens in the country — citing “increasing security risk.” The move effectively leaves Americans in Iran with no consular support.
Meanwhile, cultural casualties of the war continue to mount. UNESCO has verified damage to at least four historical sites in Iran, including the Qajar-era Golestan Palace in Tehran and the 17th-century Chehel Sotoun palace in Isfahan — both World Heritage Sites.
What Happens Next
Day 13 of the Iran war finds the conflict at a dangerous inflection point. The military campaign — Operation Epic Fury — has devastated Iran’s conventional military capabilities, with over 3,000 targets struck according to CENTCOM. Iran’s supreme leader was killed in the first minutes of the offensive, and his successor, Mojtaba Khamenei, was confirmed wounded and has not appeared publicly.
But Iran’s asymmetric response — mining the Strait of Hormuz, attacking tankers with drone boats, striking Gulf oil infrastructure, and coordinating rocket attacks with Hezbollah — is inflicting severe economic pain on the global economy. The question now is whether the record-breaking oil reserve release can buy enough time for the military campaign to neutralize Iran’s remaining capabilities, or whether the world is heading into the worst energy crisis in half a century.
As the IEA’s historic 400-million-barrel release is consumed by a market hemorrhaging 8 million barrels a day in lost supply, the math is brutally simple: at that rate, even the largest emergency release in history buys the world roughly 50 days before the reserves run dry.
This is a developing story. Check back for updates as the situation evolves.