The escalating Israel-Iran conflict has generated significant volatility in global energy markets, with crude oil futures experiencing substantial gains while gasoline prices have demonstrated relative stability. As of June 18, 2025, market dynamics reflect both immediate geopolitical tensions and underlying structural factors that continue to shape energy pricing.

Crude Oil Futures Rally

Oil futures have experienced notable increases amid the ongoing conflict. Brent crude futures reached $76.45 per barrel, representing a $3.22 increase or 4.4% gain. Similarly, U.S. West Texas Intermediate (WTI) crude rose to $74.84 per barrel, climbing $3.07 or 4.28%. These price movements reflect market concerns about potential supply disruptions in a critical energy-producing region.

Current trading data shows Brent crude at $75.81 per barrel as of June 18, 2025, down 0.84% from the previous day but still maintaining a 15.67% increase over the past month. Despite recent gains, oil prices remain 11.55% lower than year-ago levels.

Gasoline Price Stability

In contrast to crude oil volatility, U.S. gasoline prices have demonstrated remarkable stability. The national average retail gasoline price stands at $3.139 per gallon as of June 16, 2025, representing only a 1.00% increase from the previous week. More significantly, current prices remain 8.46% below year-ago levels of $3.429 per gallon. XTech predicted a +0.2% rise in the CPI MoM for the June CPI. On a seasonally adjusted basis, we predict that gasoline will be flat MoM and this research reflects the validity of that conclusion. 

This stability in retail gasoline prices, despite crude oil fluctuations, reflects the complex relationship between wholesale commodity prices and consumer fuel costs, which are influenced by refining capacity, distribution networks, and seasonal demand patterns.

Iran’s Strategic Position in Global Energy Markets

Iran maintains a significant position in global energy markets, controlling approximately 10% of the world’s oil supply. The country produces around 3.99 million barrels per day and ranks as OPEC’s third-largest oil producer. Iran’s export strategy primarily focuses on China, which subsequently refines Iranian crude for distribution throughout Asian markets.

This export pattern creates a concentrated impact zone, with Asian economies bearing the primary burden of any Iranian supply disruptions. The interconnected nature of China’s refining operations and subsequent regional distribution means that Iranian production constraints will disproportionately affect Asian energy markets compared to other global regions.

Infrastructure Targeting and Production Impact

Recent Israeli military operations have targeted Iranian energy infrastructure for the first time in the conflict’s history. Strikes have affected Iran’s South Pars natural gas field, the Shahran fuel depot, and the Shahr Rey oil refinery. While these facilities primarily serve domestic consumption rather than export markets, their targeting represents a significant escalation in the conflict’s scope.

Current Israeli operations have focused predominantly on nuclear facilities rather than major export infrastructure, which has helped moderate global oil price increases. This strategic targeting approach suggests a calculated effort to limit broader energy market disruption while achieving specific military objectives.

Strategic Importance

The Strait of Hormuz represents the world’s most critical oil transit chokepoint, facilitating the passage of approximately 20-25% of seaborne global oil supplies. This narrow waterway, measuring just 33 kilometers at its narrowest point, serves as the primary export route for Persian Gulf oil producers.

Any disruption to transit through the strait would have immediate and severe consequences for global energy markets, potentially driving oil prices well above current levels and affecting energy security worldwide.

Risk Assessment and Strategic Considerations

Despite Iran’s theoretical capability to disrupt strait operations, several factors make such action economically and strategically counterproductive. Blocking the strait would severely curtail Iran’s own oil export revenues, which constitute a critical component of the country’s economic foundation. Additionally, such action would directly contradict the current U.S. administration’s energy policy objectives of reducing domestic energy prices, potentially escalating tensions with the United States at a time when Iran faces multiple international pressures.

The economic calculus strongly favors maintaining strait operations, as disruption would harm Iran’s financial interests while providing limited strategic advantage in the current conflict context.

Market Outlook and Policy Implications

Despite crude oil volatility, gasoline prices are projected to remain relatively stable in the near term. The Trump administration maintains its forecast of decreasing energy prices over the coming year, supported by robust domestic production capacity and strategic petroleum reserve management.

Market analysts suggest that sustained gasoline price stability depends largely on conflict containment and the continued operation of critical energy infrastructure. Significant escalation could alter this trajectory, though current targeting patterns suggest a measured approach to energy-related military operations.

Regional Impact Distribution

The conflict’s energy market effects will likely remain geographically concentrated, with Asian markets experiencing the most significant disruptions due to their dependence on Iranian crude imports via Chinese refining operations. North American and European markets, with more diversified supply chains and reduced Iranian crude dependence, are expected to experience more limited direct impacts.

This geographic distribution of effects reflects the increasingly regionalized nature of global energy markets, where supply chain relationships and trade patterns determine vulnerability to specific geopolitical disruptions.

The Israel-Iran conflict continues to demonstrate the complex interplay between geopolitical tensions and energy market dynamics, with crude oil futures reflecting immediate risk premiums while retail gasoline prices remain anchored by broader market fundamentals and policy objectives.

Sources: https://tradingeconomics.com/commodity/brent-crude-oil; https://www.reuters.com/business/energy/oil-prices-extend-rise-iran-israel-conflict-enters-sixth-day-2025-06-18/; https://gasprices.aaa.com