How the Iran War & Ceasefire Talks Are Impacting Global Oil Supply

Update (July 17, 2026) — Tensions are at a new high as the U.S. and Iran are engaging in elevated air strikes, marking an escalation of a war that is threatening the global supply of oil.

The U.S. recently launched airstrikes on Iranian infrastructure, including bridges, railways and powerlines. Additionally, according sources on the ground, the U.S. launched attacks on Ahvaz, a city in southwest Iran that is marked by cultural diversity and poverty.

In retaliation, Iran has carried out strikes on U.S. allies in the region, including Qatar, Kuwait and Jordan. 

The latest conflict also marks an increased threat to oil supply chains.

Iran has requested Houthi allies in the region to close another key oil supply point, the Red Sea gateway, if U.S.-Israel forces strike the country’s energy infrastructure. Additionally, Houthi leader Abdul Malik al-Houthi has threatened attacks against Saudi oil infrastructure if the country involved itself in U.S.-Israeli strikes against Yemen.

The Red Sea gateway accounts for 7% of global oil supply. Oil prices have risen approximately 1% since the start of the recent attacks.

Update (June 22, 2026) — Shortly after a 60-day ceasefire trial period was announced, Israel continued its attacks on Lebanese villages, a violation of the ceasefire terms and conditions.

In response, Iran has brought the ceasefire agreement into question. Talks are ongoing, with Vice President J.D. Vance visiting Switzerland over the weekend to discuss plans going forward with Iranian delegates.

Highlights from the Summit include the possible implementation of a “deconfliction mechanism” in Lebanon, a plan that Iran’s Foreign Minister Abbas Araghchi has called the “first real test” of the tentative ceasefire agreement.

Quatar and Pakistan released the following joint statement regarding the summit meeting: “The Lake Lucerne Summit was conducted in a positive and constructive atmosphere. Encouraging progress has been made, including the creation of a mechanism for further technical talks.”

Update (June 19, 2026) — On June 17, Donald Trump announced he formally signed a 60-day ceasefire agreement with Iran. Of interest to propane marketers are how the deal could affect global oil supply during this period, the details of which were released days after Trump first announced the deal on June 14.

Details of the plan include a 60-day trial period, wherein the U.S. will immediately remove its naval blockade, work with regional countries to create a $300 billion fund for reconstruction of Iran’s infrastructure, immediately waive Iranian oil exports and eventually lift its sanctions and unfreeze Iranian funds when a final deal is reached. 

In return, Iran will make its “best efforts” to ensure safe passage of commercial vessels through the Strait of Hormuz, will not charge commercial vessels during the 60-day trial period and will agree to develop a plan regarding the country’s stockpiled uranium. 

Many of the details of the plan remain vague and unclear, including how Iran’s nuclear program will be monitored and regulated.

So far, the war has resulted in the death of 13 U.S. service members and more than 3,300 Iranians. 3,826 people have been killed in Lebanon. According to AAA, gas prices averaged just short of $3 prior to the war and rose to $4.56 after the Strait of Hormuz became restricted.

Long-term implications and consequences of the war are still shifting and changing with new developments.

Update (March 20, 2026) — The South Pars natural gas field recently came under attack from the U.S.-backed Israeli armed forces. The South Pars field is part of the world’s largest oil field. In retaliation, Iran launched attacks on energy infrastructure in neighboring Middle East countries, including Qatar, Saudi Arabia and the United Arab Emirates. 

The strikes are another escalation in a rapidly developing war that is threatening the global energy supply network. 

On March 18, the Trump administration announced plans to implement a 60-day waiver of maritime shipping requirements under the Merchant Marine Act of 1920. Under this law, commonly referred to as the Jones Act, ships transporting goods and people between U.S. ports must be built, owned and operated by Americans.

By waiving the Jones Act, the White House aims to alleviate some of the pressures on the global supply chain being caused by the Iran war.

According to a recent release in the National Propane Gas Association’s Bobtail, “the current 60-day waiver provides a unique test case for the propane industry and may demonstrate the potential value of a seasonal Jones Act waiver during prolonged supply disruptions, peak harvest and heating season.”

The plans to waive maritime regulations comes on the heels of the administration’s announcements to ease the sanctions placed on Venezuela and Russia. In the days that followed, the administration also announced plans to waive sanctions on Iranian oil for at least 30 days.

Analysts remain unsure how effectively these efforts will stabilize oil supply in a war that continues to evolve by the day. 

Update (March 13, 2026)

In response to Iran’s retaliatory measures in the Strait of Hormuz after joint U.S.-Israel strikes on Tehran, various agencies have faced pressure to release emergency oil reserves to stabilize a supply chain under stress.

The U.S. announced plans to release 172 million barrels of oil, a move that follows the International Energy Agency’s (IEA) decision to release petroleum reserves to supplement international supply. IEA has determined to release 400 million barrels of oil, the largest reserve release in the agency’s history.

The release of emergency reserves from the Strategic Petroleum Reserve comes as oil products pricing have spiked in the face of the rapidly developing Iran war. The Energy Department is expected to begin release of the emergency reserves beginning next week, over a span of 120 days.

Oil supply experts remain concerned that the volatility of the war, which has disrupted approximately 20% of the world’s oil supply, cannot be fully offset by the release of emergency reserves. 

March 6, 2026 — On Feb. 28, U.S.-Israel forces conducted strikes on Iran, killing Iran’s Supreme Leader Ali Khamenei, as well as over 100 people, many of them children, at a school in southern Iran. Iran has retaliated by carrying out attacks on Israel and surrounding Middle Eastern countries that host U.S. military bases. 

In a recent NPR interview, journalists explored the potential impact of the escalated conflict on global oil supply and gas prices.

“Iran is a major oil exporter to China, even despite U.S. sanctions,” said NPR journalist Julia Simon. “But that’s not the biggest worry here. The real worry for global oil markets is about where all all this fighting is taking place. The Strait of Hormuz — it’s this key shipping route. To get to foreign markets, those exports go through the Strait of Hormuz. About 20% of global oil and oil products go through that strait normally.”

Traffic through the Straits of Hormuz has already been impacted by the increased uncertainty and violence in the area, with some oil transport ships reporting attacks between March 1 and March 4. This is in keeping with the recent statement from an Iranian Revolutionary Guards official to attack any ships crossing the straits, a threat that has been made for years by the Iranian government in the event of an attack on the Islamic Republic. 

Saudi Arabia, a key U.S. ally in the region, is the world’s largest oil exporter, with 7.2 million barrels per day passing through the Straits of Hormuz.