Brent oil hits highest level since 2022 amid Iran conflict

Monday 23 March 2026 - 08:37

By: Dakir Madiha

Brent oil hits highest level since 2022 amid Iran conflict

Oil prices have surged to their highest levels in nearly four years as the conflict involving Iran disrupts global energy supply, raising inflation risks and reviving concerns about stagflation.

Brent crude closed at $112.19 per barrel on Friday, its highest level since July 2022. In the United States, the average price of regular gasoline rose to $3.94 per gallon, up more than $1 from $2.93 just a month earlier, according to AAA. Economists warn that the energy shock is now feeding into global inflation forecasts, with risks not seen since the early stages of the war in Ukraine.

The supply crisis has intensified as the Strait of Hormuz, a key route for nearly 20 percent of global oil shipments, has effectively been shut down. Iran’s Islamic Revolutionary Guard Corps said no oil would pass through the strait, warning that vessels linked to the United States, Israel or their allies would be targeted.

Strikes on energy infrastructure have worsened the disruption. Israeli attacks on Iran’s South Pars gas field triggered retaliatory strikes on Ras Laffan in Qatar, damaging facilities responsible for about 17 percent of the country’s liquefied natural gas export capacity. Repairs are expected to take several years. Saudi Arabia’s main Red Sea port has also been hit, further tightening supply.

The International Energy Agency said its 32 member countries have agreed to release strategic oil reserves to stabilize markets. However, analysts estimate these reserves would only offset around 20 days of disruption if the Strait of Hormuz remains blocked. Market forecasts suggest oil could stay above $100 per barrel for an extended period under current conditions.

Rising energy costs are reshaping inflation outlooks. Oxford Economics has raised its global inflation forecast for 2026 to 4 percent, up from 3.3 percent. In a more severe scenario where Brent averages $140 per barrel for two months, inflation could reach 5.8 percent, with mild recessions expected in the eurozone, the United Kingdom and Japan.

The International Monetary Fund has also warned of broader economic risks. If oil prices remain above $100 per barrel for a year, global inflation could rise by up to two percentage points while economic output declines. The US Federal Reserve has kept interest rates unchanged but revised its inflation projections higher, citing pressure from energy prices.

Outlooks remain uncertain. Some forecasts suggest Brent could fall to $65 per barrel by year-end if the conflict eases, while prolonged disruption could push prices as high as $130 in the coming months. Analysts caution that continued attacks on shipping routes and energy infrastructure reduce the likelihood of a quick resolution, increasing the economic cost of the conflict.