Energy prices surge as tanker disruptions and facility shutdowns rattle global supply

FRANKFURT, Germany (AP) — Oil prices rose sharply Monday as disruptions to tanker traffic through the Strait of Hormuz raised uncertainty about how U.S. and Israeli attacks on Iran would affect supply to the world economy.

U.S. oil traded 7.6% higher at $72.12 per barrel, while international standard Brent was up 8.6% at $79.11 per barrel. Natural gas futures in Europe jumped more than 40% after Qatar, a major supplier, halted production due to the conflict.

Higher oil prices raise the prospect of costlier gasoline for U.S. drivers as well as increased prices for other goods at a time when people in many countries have been stung by inflation.

A key focus was the Strait of Hormuz at the southern end of the Persian Gulf, through which 20% of the world's oil supply passes. Tanker traffic dropped sharply as satellite navigation systems were disrupted, data and analytics firm Kpler said on X. The U.K. Maritime Trade Operations Center reported attacks on several vessels in the area on either side of the strait and warned of elevated electronic interference to systems that show where ships are.

A bomb-carrying drone boat struck a Marshall Islands-flagged oil tanker in the Gulf of Oman, killing one mariner, Oman said.

Iran has been threatening vessels approaching the Strait of Hormuz and is believed to have launched multiple attacks.

Saudi Arabia intercepted Iranian drones that attacked the Ras Tanura oil refinery near Dammam and the refinery was shut down as a precaution, Saudi state television reported. Market attention has focused on whether the conflict will widen to other oil-producing countries in the region.

The price of crude is the single largest factor in how much U.S. drivers pay for fuel — a highly political issue ahead of midterm Congressional elections. And higher oil prices are usually felt at the pump within a couple of weeks at most.

Gas prices are already rising ahead of the summer driving season as people travel more. The national average for a gallon (3.7 liters) of regular went up by more than 5 cents last week to $2.98, according to motoring club AAA.

Crude price increases are substantially reflected in pump prices in 20 days and a $10 per barrel increase typically results in around a 25 cent rise per gallon, according to 2019 research by the Federal Reserve Bank of Dallas.

The price of crude has less impact in Europe, where taxes make up most of the price of fuel, but higher energy costs can affect prices across the economy. A sustained rise of $15 per barrel could add 0.5 percentage points to consumer prices in Europe, according to Holger Schmieding, chief economist at Berenberg bank.

There are pipelines that circumvent the strait, but they don't have enough capacity to move all the oil that passes through the waterway. Saudi Arabia, Iraq and the United Arab Emirates all depend on tankers to get the bulk of their oil to global markets.

Analysts say completely blocking the strait would hurt Iran too since all of its 1.6 million barrels per day pass through the strait. Most of that goes to China, where refineries are less concerned about U.S. sanctions that prevent Iran from selling its oil elsewhere.

The strait is also a key route for liquefied natural gas. European futures contracts for April delivery shot up to 45.46 euros ($53.26) on the ICE commodities exchange after QatarEnergy said it would stop its production of liquefied natural gas. The state-owned firm blamed the war for the decision.

Qatar is a major gas supplier for Europe, which relies on shipments of liquefied gas, or LNG, to replace supplies of Russian pipeline gas lost due to the invasion of Ukraine.

Monday’s price increase was within the $5-$10 per barrel range expected by analysts based simply on the fear factor associated with the outbreak of war. And some war concerns were already reflected in the price before the conflict started.

However, long-term disruption to ship traffic in the Strait of Hormuz could send prices even higher, and so could damage to oil infrastructure in other Gulf countries. Meanwhile, a shorter conflict in which disruptions are easily reversible could mean the current price spike won’t last.

“The key question for the global economy is obvious: Will the Strait of Hormuz be effectively closed for oil and gas exports for more than a few weeks?” Schmieding said. “If so, it would hurt global growth and raise global inflation noticeably. But I would expect Trump to go to great lengths to prevent a lasting surge in energy prices that could hurt him at home ahead of the U.S. midterm elections in November.”

He forecast oil prices would return to $65-$70 per barrel after a near-term spike.

Iran’s attack on the Ras Tanura refinery represents a major escalation, a Middle East analyst said, with Iran demonstrating that key Gulf energy infrastructure is within its reach, and investor sentiment likely to worsen.

Torbjorn Soltvedt, principal Middle East analyst at risk intelligence company Verisk Maplecroft, said Iran's goal is to raise the economic costs of the conflict for Gulf states like Saudi Arabia and the United Arab Emirates, hoping that these countries will pressure the U.S. and Israel to de‑escalate.

He said that the coming days and weeks will be marked by uncertainty and volatility in global markets, with oil prices likely to push past $80 per barrel.

“If we start to see additional direct attacks against energy infrastructure, not just in Saudi Arabia and Kuwait, but in other countries in the region, then that’s when the market will start to think about a push toward $90 and perhaps even beyond.”

Associated Press writers Suzan Fraser in Ankara, Turkey, and Jon Gambrell in Dubai, United Arab Emirates, contributed to this report.

FILE - Fishermen work in front of oil tankers south of the Strait of Hormuz Jan. 19, 2012, offshore the town of Ras Al Khaimah in United Arab Emirates. (AP Photo/Kamran Jebreili, File)

FILE- In this Wednesday, June 8, 2011 file photo, sun sets behind an oil pump in the desert oil fields of Sakhir, Bahrain. (AP Photo/Hasan Jamali, File)

Petrol prices are displayed at a filling station in Frankfurt, Germany, Monday, March 2, 2026. (Andreas Arnold/dpa via AP)

AKROTIRI, Cyprus (AP) — Britain is not at war, the government said Monday, despite saying it would allow the U.S. to use British bases during its war with Iran and after a Royal Air Force base in Cyprus was struck by an Iranian-made drone.

Sirens sounded again at RAF Akrotiri on Monday and British Typhoon and F-35 warplanes were scrambled. Cyprus government spokesman Constantinos Letymbiotis posted on X that two drones heading toward the British base had been intercepted.

More than two decades after Britain followed the United States into a devastating war in Iraq, it is trying to avoid being drawn into a new Middle East conflict with unpredictable consequences.

U.K. officials say an attack drone hit the runway at RAF Akrotiri, a British air force base in Cyprus, late Sunday. There were no injuries and “minimal” damage, but the strike brought the conflict onto European soil.

Cyprus President Nikos Christodoulides identified it as a “Shahed-type” Iranian drone. It was not immediately clear whether it was launched from Iran or by a Tehran-backed militant group such as Hezbollah in Lebanon.

Akrotiri is the U.K.’s main air base for operations in the Middle East and in recent years has been used by British warplanes on missions against the Islamic State group in Syria and Iraq and to strike Houthi targets in Yemen.

As tensions between the U.S. and Iran mounted, Britain last month deployed extra F-35 fighter jets to Akrotiri, along with radar, counter-drone systems and air defenses.

Britain retained the base, and another on Cyprus, after the eastern Mediterranean island gained independence from British colonial rule in 1960.

It was last attacked in 1986, when pro-Libya militants struck the base with mortars, rocket-propelled grenades and small arms, injuring three dependents of British personnel. The latest attack is believed to be the first attack on Cyprus from outside the country since Turkey’s invasion of the island in 1974.

Britain’s defense ministry said families of U.K. personnel who live on the base were being moved to nearby accommodation as a precaution.

Some residents of the nearby village of Akrotiri also opted to leave their homes and spend the night with relatives elsewhere.

Villager Mikaella Malta said she heard “strange noises” just before the drone explosion.

“We tried to figure out what was going on. We then picked up whatever we could from home. We were in a panic and we left,” she told the AP.

British officials have refused to say whether the U.K. supports the U.S.-Israeli war on Iran. They have said that Iran should not be able to have a nuclear weapon and called for an end to Iranian strikes and a diplomatic solution.

Britain did not take part in the strikes on Iran that began Saturday, and did not allow the U.S. to use U.K. bases in England or on the island of Diego Garcia in the Indian Ocean.

But on Sunday, Prime Minister Keir Starmer announced that he had agreed to let the U.S. use the bases for attacks on Iran’s missiles and their launch sites. He said the change came in response to Iranian attacks on U.K. interests and Britain’s allies in the Gulf, and is legal under international law.

Britain says its bases can’t be used for attacks on political and economic targets in Iran, and Starmer said the U.K. is “not joining the U.S. and Israeli offensive strikes.”

U.S. President Donald Trump told the Daily Telegraph on Monday he was “very disappointed in Keir," saying the prime minister "took far too long” to change his mind about the use of British bases.

Starmer said Britain would not be joining the U.S.-Israeli strikes, and Middle East Minister Hamish Falconer stressed that “the U.K. is not at war.”

The memory of Iraq remains raw for many in Britain. The decision by then-Prime Minister Tony Blair to join the U.S.-led invasion in 2003 remains one of the most contentious in modern British history.

The subsequent yearslong conflict killed 179 British troops, some 4,500 American personnel and many thousands of Iraqis.

“We all remember the mistakes of Iraq and we have learned those lessons," Starmer told lawmakers in the House of Commons on Monday. “Any U.K. actions must always have a lawful basis and a viable, thought-through plan.”

Critics say attempts to set firm limits on Britain’s involvement in Iran could be swept away by a fast-moving conflict.

“We are being drawn in, just as we were in Iraq, following the U.S. into an incredibly dangerous situation,” said John McDonnell, a lawmaker from the governing Labour Party.

Patrick Bury, senior associate professor in security at the University of Bath, said Britain is in an “incredibly difficult” position.

“We’ve had very little explanation for this war, really, from the U.S.,” he said. “The U.K. policy is always heavily on upholding international law. So they’re kind of looking at this going, ‘How does this fit with our own foreign policy?’ And I think that explains why they’ve held off as much as they could.

"And nevertheless, they get a direct request. What are you going to do, say no?”

Lawless reported from London.

A Fighter Jet prepares for landing at the U.K.'s RAF Akrotiri air base after it was hit by a drone strike early morning near Limassol, Cyprus, Monday, March, 2, 2026. (AP Photo/Petros Karadjias)

Britain's Prime Minister Keir Starmer issues a statement at 10 Downing Street, London, on the latest developments in the Middle East, Saturday Feb. 28, 2026. (Jonathan Brady/Pool via AP)

A dog sits at the main gate of the U.K.’s RAF Akrotiri air base after it was hit by a drone strike early morning near Limassol, Cyprus, Monday, March, 2, 2026. (AP Photo/Petros Karadjias)