US Strikes Targets in Iran as Both Sides Trade Fire Over Gulf Bases

What Happens Next

• →War-risk insurance premiums for vessels transiting the Strait of Hormuz increase sharply, adding $1-3 per barrel equivalent to shipping costs and accelerating rerouting of tankers around the Cape of Good Hope where feasible.
• →China and India intensify direct crude purchasing agreements with Iran at discounted rates, circumventing sanctions enforcement that Washington lacks bandwidth to police amid active military operations.
• →Gulf Arab states—particularly Saudi Arabia and the UAE—face pressure to publicly align with or distance from the US campaign, fracturing GCC cohesion as Oman and Qatar pursue back-channel diplomacy with Tehran.
• →European energy importers accelerate emergency drawdowns of strategic petroleum reserves and fast-track LNG import contracts with US and Qatari suppliers to hedge against prolonged Hormuz disruption.

Near-term: Brent crude prices surge 20-40% above pre-conflict levels as physical supply disruption risk through the Strait of Hormuz gets priced in, with volatility sustained by conflicting damage reports from both sides. Long-term: Major Asian oil importers—China, India, Japan, South Korea—invest heavily in overland pipeline alternatives, strategic reserve expansion, and renewable energy capacity to structurally reduce dependence on Strait of Hormuz transit.