Middle East War Sends Shockwaves Through Oil Markets
The Middle East is burning — and the rest of the world is starting to feel the heat. One week into the US-Israeli war on Iran, bombs are still falling on Tehran, Beirut is under renewed fire, and the global energy system is teetering on the edge of a crisis not seen since Russia's invasion of Ukraine in 2022.
What's Happening in Iran Right Now
Israel launched a fresh "broad-scale wave" of strikes on Friday, targeting regime infrastructure in Tehran, while Iran fired missiles back toward Israel in response.
The death toll inside Iran has now climbed to at least 1,230 since the war began on February 28. Iran's Ministry of Foreign Affairs claims that over 3,600 civilian sites have been damaged, including hospitals, schools, residential areas, the Tehran Grand Bazaar, and the historic Golestan Palace — a UNESCO World Heritage Site.
The war did not start small. Beginning February 28, the US and Israel launched coordinated joint attacks — codenamed Operation Roaring Lion by Israel and Operation Epic Fury by the United States — targeting Iranian officials, military commanders, and nuclear facilities. The operation resulted in the killing of Supreme Leader Ali Khamenei.
Beirut Is Back in the Crosshairs
The war has spilled far beyond Iran's borders. Israel carried out heavy overnight strikes on Beirut's southern suburbs — a stronghold of the militant group Hezbollah — and issued evacuation orders warning residents to "save your lives and leave." Lebanese officials say more than 95,000 people have been displaced since the conflict began.
Hezbollah is the Iran-backed armed group that has long operated from southern Lebanon and remains one of Tehran's most powerful regional allies.
Who Will Lead Iran Now?
With Khamenei dead, Iran faces a leadership vacuum that is drawing unusual international attention. On March 1, a three-member transitional council was established — made up of the president, the head of the judiciary, and a jurist from the Guardian Council — to temporarily fulfil the duties of the supreme leader.
One potential successor is Khamenei's son, Mojtaba Khamenei. But Trump firmly opposes that choice, telling Axios, "They are wasting their time. Khamenei's son is a lightweight. I have to be involved in the appointment."
Analysts are skeptical Trump can actually shape that outcome. Iran's system for selecting a supreme leader is internal, complex, and deeply political — not something a foreign president can simply dictate.
Gulf States Are Choosing Sides
Arab nations in the Gulf that tried to stay neutral are being forced to pick a side — and they appear to be moving toward the US. US Defense Secretary Pete Hegseth said Gulf states including the UAE, Qatar, Bahrain, Kuwait, and Saudi Arabia are now willing to play a more offensive role, allowing the US access to military bases they had previously denied, after coming under attack from Iranian missiles and drones.
Iran's strategy of striking its neighbors may have backfired badly, pulling countries into the conflict that Tehran needed to stay on the sidelines.
The Oil Crisis Is Getting Worse
The Strait of Hormuz — a narrow waterway between Iran and Oman through which roughly one-fifth of the world's daily oil supply flows — has effectively been shut down. Iran's IRGC officially confirmed the strait was closed on March 2, threatening to strike any vessel attempting to pass. Oil prices rose sharply, with Brent crude increasing by 10 to 13% in initial trading, and analysts forecasting potential rises to $100 per barrel or higher if disruptions persist.At least five tankers have been damaged, two crew members killed, and about 150 ships are now stranded around the strait. Major shipping companies have suspended all transits.
The ripple effects are being felt at gas stations in America too. Analysts at Euronews noted that persistently higher oil prices are threatening the interest rate policies of major central banks, including the US Federal Reserve, as high energy costs fuel inflation and limit scope for rate cuts. Iran Warns Iraq's Kurds
In a sharp escalation of regional pressure, Iran warned Iraq's Kurdistan region that if Iranian Kurdish opposition groups use its territory to enter Iran, "all Kurdistan Region facilities will be targeted." Iran also threatened to cut off any support it had previously provided to Kurdish Iraq, including during the brutal ISIS assault years ago.
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What Comes Next
This conflict is no longer just a military story. It is reshaping energy markets, displacing tens of thousands of civilians, pulling reluctant nations into a war they tried to avoid, and forcing the world to ask a question with no easy answer: how does this end?
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With Trump saying there are "no time limits" on the war's duration and Iran vowing continued retaliation, the coming days will determine whether this spiraling conflict can be contained — or whether the world is watching the opening chapters of something much larger.
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