Iran War Sends Oil Prices Above $100/bbl
Fragility of Dirty Fossil Fuel Systems Exposed
The War in Iran has driven the price of oil above $100/bbl, the highest level since 2022.
When the United States and Israel attacked Iran on February 28, Iran responded by effectively closing the Strait of Hormuz - the narrow waterway through which most of the region’s oil production must transit to reach global markets. This blockaded production represents about 20% of the world’s total oil supply.1
Since that time, global oil prices have increased from $67 to a peak of $116 late Sunday night, before settling down to around $105 early Monday morning. Sunday’s upswing was the largest same-day gain since 1988.2
Gasoline prices have already risen sharply, and are expected to rise much further. $4.00/gal gasoline is predicted to be all but inevitable in the United States, and $5.00/gal and even $6.00/gal are possible over the next few months.3 Elsewhere, prices are headed towards and may exceed C$2.00/L in Canada, A$2.00/L in Australia, and £1.50/L in the UK.
The Iran War highlights one of the oil economy’s most pernicious non-environmental harms. In addition to contributing to climate change and deadly local air pollution, gasoline-powered vehicles are also vulnerable to vicious fuel price shocks. These shocks occur even in places - like the United States - that produce large amounts of oil domestically, because crude oil is a fungible commodity traded in a single global market.
Rain That Grows Flowers, Not Thunder
High oil prices will produce bumper profits for the oil industry, and have positive economic effects on petrocities like Houston, Calgary, and Aberdeen. Everyone else, however, will suffer. Higher gasoline prices will directly affect the majority of car owners who do not yet own an electric vehicle (EV). Airline ticket prices will soar. And rising diesel prices will spread inflation throughout any part of the economy that intersects with road transportation.
Thus far the US-Israeli war on Iran has brought nothing but death, destruction, and instability to the Middle East, its people, and its environment. Over the weekend, residents of Tehran witnessed apocalyptic scenes as Israeli airstrikes struck the city’s oil refineries. Acrid hydrocarbon rain poured down upon the 6,000-year-old settlement, and its unique system of passive, tree-lined irrigation canals - called jubs (جوی) in Persian - filled with burning crude oil, turning vital ecological infrastructure into veins of hellfire.4
There may, however, be one unintentional climate benefit to this otherwise pointless chaos. Oil price volatility may hasten the transition to electric vehicles both on a geopolitical level - as countries like China and India desperately seek to cut gasoline imports - and on a personal level: now would be an excellent time for individual consumers anywhere in the world to buy an EV.
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