The clock is ticking on the U.S.-Israeli war in Iran. The emerging view from oil industry executives and analysts is that the economic and market fallout from the war could escalate sharply if the Strait of Hormuz isn’t reopened within roughly the next one to three weeks. Even then, enough damage may have been done already to leave energy and many other prices higher for longer. 

These risks haven’t been clearly reflected in some widely followed markets, including stocks broadly and the benchmark Brent crude price. Stopgap measures to soften the blow of the oil cutoff have kept crude prices relatively low in the U.S. and European markets. But when those measures lose their effectiveness in early-to-mid April, analysts warn there will be little the U.S. or other governments can do to keep energy prices from rising dramatically. 

Iran has attacked civilian ships and energy infrastructure in its neighborhood, causing traffic in the narrow Strait of Hormuz to fall to a standstill. Roughly 20% of global oil supply normally moves through the approximately 100-mile waterway, which borders Iran. Some oil has been rerouted through pipelines, but they can only carry so much. The U.S. and others are releasing 400 million barrels of oil from strategic reserves — the biggest release on record — and the U.S. has temporarily lifted sanctions on some Russian and Iranian oil to give the market breathing room.

The White House says it believes the president’s military strategy will soon end the Iranian threat, allowing the price worries to fade.

But all agree there is no substitute for reopening the strait. Oil industry executives have in the past few days sketched out the risk of growing disruption from the war. 

“There are very real, physical manifestations of the closure of the Strait of Hormuz that are working their way around the world,” Chevron CEO Mike Wirth said Monday at S&P Global’s CERAWeek in Houston. Shell CEO Wael Sawan echoed him a few days later at the annual gathering of industry heavyweights. Disruptions that started in South Asia have “moved to Southeast Asia, Northeast Asia and then more so into Europe as we get into April,” Sawan said Wednesday.

The talk of the conference was the difference between so-called paper and physical prices, said Ben Cahill, director for energy markets and policy at the Center for Energy and Environmental Systems Analysis, University of Texas at Austin. 

Paper prices reflect trading in financial markets and are often the headline oil prices discussed in the press. They have generally remained lower than prices for physical delivery of oil, especially in Asia, which is the main buyer of crude from the Middle East.

Brent crude futures prices rose 36% from Feb. 27, the last day of trading before the started, through March 27, when they traded above $113 a barrel. But the Dubai price, which tracks physical delivery from certain Middle East sellers, is up 76%, more than twice the paper price, at $126. That price has been especially volatile lately. 

One reason paper prices are lower is they have regularly fallen in reaction to suggestions by President Donald Trump that the war could soon end or otherwise de-escalate. Traders call that “jawboning.” 

The looming possibility of physical supply shortages in the oil market appears to be blunting the effect of Trump’s jawboning. Financial markets reflect the reality that Trump has often managed to avoid worst-case scenarios, including when he attacked Iran’s nuclear program in June. Oil futures then spiked but quickly fell once it was clear the war wouldn’t spread. 

The head of the International Energy Agency said on Monday that at least 40 energy assets across nine countries in the Middle East have been “severely or very severely” damaged since the Iran war began, raising fears of prolonged supply disruptions.

Speaking at the National Press Club in Australia’s capital, IEA Executive Director Fatih Birol said damage to oil and gas fields, refineries and pipelines across the Middle East would take some time to repair.

His comments come as market participants closely monitor threats from the U.S. and Iran over energy facilities as the sprawling regional conflict enters its fourth week.

The Iran war has severely disrupted energy trade flows through the strategically vital Strait of Hormuz, creating what the IEA says is the largest supply disruption in the history of the global oil market. The global supply of liquefied natural gas (LNG) has also been reduced by roughly 20% since the conflict began on Feb. 28.

Birol said the fallout from the Iran war is equivalent to the two major oil crises of the 1970s and the 2022 gas crisis “put together.”

He added: “And, if I may, not only oil and gas. Some of the vital arteries of the global economy, such as petrochemicals, such as fertilizers, such as sulfur, such as helium. Their trade is all interrupted, which would have serious consequences for the global economy.”

U.S. President Donald Trump on Saturday threatened to “obliterate” Iran’s power plants if Tehran did not fully reopen the Strait of Hormuz within 48 hours.

The narrow waterway is a key maritime corridor that connects the Persian Gulf and the Gulf of Oman. Roughly 20% of global oil and gas typically passes through it.

Iran’s Parliament spokesperson Mohammad Baqer Qalibaf responded, saying that critical infrastructure and energy facilities in the Gulf region could be “irreversibly destroyed” should Iranian power plants be attacked.

Given that shipping has virtually ground to a halt in the Strait of Hormuz since the conflict began, the IEA’s Birol said the reopening of the waterway was the “single most important” solution to the global energy crisis.

He singled out Asia as being at the forefront of the Iran war energy shock and said the IEA was prepared to follow-up its historic release of 400 million barrels of oil to the market on March 11.

“If it is necessary, of course, we will do it,” Birol said.

— CNBC’s Anniek Bao contributed to this report.

U.S. President Donald Trump on Wednesday warned that if Iran continued targeting Qatar’s energy facilities, America would “massively blow up the entirety of the South Pars Gas Field.”

Tehran has attacked a key energy facility in Qatar after Israel bombed the South Pars Gas in Iran, signaling a sharp escalation in the conflict and sending energy prices soaring.

Qatar said Wednesday that Iranian missiles caused “extensive damage” at Ras Laffan Industrial City, home to the largest liquefied natural gas, or LNG, export facility in the world.

Trump also denied any prior knowledge of Israel attacking South Pars, pushing back against reports that the strike was coordinated with and approved by his administration.

In a social media post Wednesday night stateside, Trump said that “the United States knew nothing about this particular attack, and the country of Qatar was in no way, shape, or form, involved with it, nor did it have any idea that it was going to happen.”

Trump also urged Israel to end attacks on the South Pars gas field, unless Iran “unwisely” decides to attack Qatar. In that case, the U.S. will “massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before.”

The attack on South Pars — the world’s largest natural gas reserve, shared between Iran and Qatar — marked the first time Israel has targeted Iranian natural gas production infrastructure since the conflict began on Feb. 28.

Iran has fired ballistic missiles at Qatar’s Ras Laffan Industrial City, with ​QatarEnergy saying the attack had caused “extensive damage” warranting deployment of emergency response teams to contain fires at the site. No casualties were reported.

Separately, Reuters reported Thursday that the U.S. government was considering deploying thousands of U.S. forces to the Middle East, raising the prospect of further escalation.

As tensions spiral, world leaders are scrambling to contain the Middle East conflict amid fears of deepening the turmoil in global energy markets.

German Foreign Minister Johann Wadephul on Wednesday warned of a “crisis of the gravest order” if global supply chains continued to be disrupted, calling for a path toward de-escalation and a cessation of hostilities once U.S. and Israeli military objectives are achieved, according to local media reports.

The United Arab Emirates called the targeting of energy facilities linked to the South Pars field in Iran a “serious escalation,” posing “a direct threat to global energy security” with severe environmental repercussions.

The UAE Ministry of Foreign Affairs also called Iran’s targeting of its Habshan gas facility and Bab field a “terrorist attack,” risking a “dangerous escalation.”

Qatar’s foreign ministry spokesperson Majed al-Ansari described the Israeli strike on South Pars as “a dangerous and irresponsible step” amid escalating regional tensions.

The Gulf nation has declared Iranian military and security attachés and their staff at the Iranian embassy in Doha “persona non grata,” ordering them to leave the country within 24 hours.

Saudi Arabia’s Foreign Minister Prince Faisal bin Farhan Al Saud also appeared to toughen the tone, reportedly saying that “what little trust there was before with Iran has completely been shattered.” Both political and non-political responses to Iran remain on the table, he added.

Iran’s Islamic Revolutionary Guard Corps on Wednesday threatened to escalate hostilities by targeting oil and gas facilities in Saudi Arabia, the UAE, and Qatar.

In a post on X, Iran’s President Masoud Pezeshkian condemned the strikes on Iran’s energy infrastructure, saying that they “could have uncontrollable consequences, the scope of which could engulf the entire world.”

The attacks on Middle East energy production facilities have further deepened supply disruption triggered by the conflict. Brent crude May futures rose 4% to $111.77 a barrel as of 10:25 p.m. ET , while U.S. West Texas Intermediate futures for April climbed over 1.3% to $97.56 per barrel.

Oil tanker traffic through the Strait of Hormuz — a vital chokepoint for one-fifth of global oil supply and a significant share of LNG exports — has plunged since the war began, with the waterway effectively closed to most commercial shipping.

The energy price shock that followed Russia’s invasion of Ukraine four years ago is fresh in the minds of European policymakers as the conflict in Iran once again drives oil and gas prices higher. Experts, however, think this time could be different.

Fears of a full-blown energy crisis on that scale — which saw oil top more than $120 a barrel by June 2022, gas prices soar, household energy bills rise, and eurozone inflation hit a record 9% — may yet be overblown, according to investment strategists.

Brent crude, the global oil benchmark, has retreated from the near-$120 per barrel seen earlier in the week, as the International Energy Agency agreed on Wednesday to release a record 400 million barrels of oil from its emergency reserves. European natural gas prices, as measured by the Dutch TTF futures benchmark, also pulled back from a three-year high of 63.77 euros per megawatt-hour and were last seen under 50 euros per MWh on Wednesday.

James Smith, developed markets economist focusing on the U.K. at ING, said that while the initial energy price reaction appears “eerily familiar” to the start of the Ukraine invasion, the global economic picture looks very different from the 2022 shock.

“The 2022 energy crisis landed on a global economy that was ripe for inflation to take off. Supply chains were fractured, job markets tight, and fiscal policy was fueling the fire. All of that, to varying degrees, is less true today,” Smith said in a note.

The impact on Europe’s inflation trajectory hinges on the duration of the conflict, analysts say.

The ongoing shutdown of Qatari production of liquefied natural gas (LNG) — which accounts for almost a fifth of global LNG supply — and attacks on vessels in and near the critical Strait of Hormuz could disrupt oil and gas stocks in Europe for longer.

With Elon Musk’s xAI planning to build a massive, natural-gas burning power plant in Southaven, Mississippi, the state’s environmental authority has scheduled a board meeting for Tuesday — Election Day for the 2026 primaries — to decide whether to grant the company key permits.

The NAACP and other civil rights and environmental advocates tried to get the meeting delayed, arguing that it was being rushed and would conflict with some residents’ efforts to vote. The groups also said that by holding the meeting in Jackson, nearly 200 miles away from Southaven, those directly affected by the plant are impeded from attending.

“This is not only a civic duty conundrum, but an unnecessary financial burden to Black residents and individuals who live in low-income and other communities near the facility,” the NAACP wrote in a letter to the Mississippi Department of Environmental Quality (MDEQ) that’s dated March 8, but was released publicly on Monday.

They asked that the hearing be rescheduled and moved to a site closer to the proposed facility.

The MDEQ denied the request on Monday, writing in a response to the NAACP that its permit board “regularly meets on the second Tuesday of each month, which has been the standard practice for decades,” and that the regulator, “considers matters on a statewide basis.” A copy of the letter was shared with CNBC.

The meeting is set to take place a little over a month after Musk merged xAI with SpaceX, his reusable rocket company, in a transaction that valued the combined entity at $1.25 trillion. Since starting xAI in 2023, Musk has tried to turn the AI company into an OpenAI competitor in the booming generative AI market.

Training and running AI models requires hefty amounts of compute and power, and rising utility bills have been partly blamed on the massive electricity consumption of new data centers. At a meeting last week with the White House, execs from tech companies, including xAI, signed non-binding pledges to supply their own power for their facilities.

So far, xAI has relied on its Colossus 1 and Colossus 2 data centers in Memphis, Tennessee, just across the Mississippi state line. In Southaven, a roughly 15 minute drive from Memphis, xAI is investing in the proposed power plant, and a large data center dubbed Macrohardrr.

Following the MDEQ’s response on Monday, the NAACP said in a statement that by having the hearing the morning of Election Day, three hours away from the community, “their actions speak volumes.”

“They’re trying to sneak xAI’s data center into the community’s backyard and they don’t care about the people living there,” the letter said.

In February, the NAACP filed a notice of intent to sue xAI over alleged Clean Air Act violations in Southaven.

As CNBC previously reported, residents in the area say they’ve endured round-the-clock noise pollution, and are concerned about air quality and public health issues from xAI’s use of “temporary” natural gas-burning turbines. Research by scientists at the University of Tennessee found that xAI’s earlier turbine use added to air pollution woes in Greater Memphis.

At a public hearing on Feb. 17 in Southaven, about 200 residents turned out to implore state and local officials to deny xAI authorization to rapidly build out data and power infrastructure without greater transparency, community engagement and effective efforts to prevent noise and air pollution.

Physicians, parents, teachers and local officials spoke out at the hearing.

“We are slowly falling out of love with where we have decided to grow our family,” said Taylor Logsdon, a mother of three, citing pollutants, noise levels and negative health effects. “It’s no coincidence that this is happening now. And I feel it will only get worse.”

A recent investigation by Floodlight showed that xAI has been operating more than a dozen “temporary” turbines concurrently in Southaven, as it previously did in Memphis. The company has argued that the turbines did not require federal permits, but environmental compliance experts have disagreed.

Community pushback and regulatory requirements are among the factors driving Musk and other tech executives to explore the potential of data centers in space.

WATCH: SpaceX takes on xAI cash burn after merger

November’s midterm was always supposed to be about affordability. Then, the bombs began falling in Iran.

The expanding U.S. war in the Middle East threatens to scramble the cost-of-living narrative that has so far defined the contest for control of Congress. The election, now less than eight months away, will determine whether President Donald Trump retains his iron grip on Washington or spends his last two years in office fending off Democratic congressional majorities.

Both parties have sought to capitalize on kitchen-table issues, as Americans struggle to keep up with the rising costs of ordinary goods and services. The war in Iran now threatens to exacerbate those concerns — and Democrats are seizing on the opportunity to pillory Trump and Republicans for beginning a conflict that could make life even more expensive for ordinary Americans.

“Because there was no plan going in, I think there will be lots of things that are unforeseen consequences of this,” Sen. Martin Heinrich, D-N.M, the top Democrat on the Senate Energy and Natural Resources Committee, said in an interview with CNBC. “I mean you saw how much gas has gone up in a day, oil futures have gone up, there are going to be a lot of knock-on effects.”

Some of those knock-on effects have already been evident. U.S. crude oil has jumped past $90 per barrel, up from $67 the day before the war broke out. The global market index Brent has skyrocketed to more than $90 per barrel. That’s caused gas prices to spike to about $3.38 per gallon, according to a national average from Gasbuddy, up more than 35 cents from the week before the war.

Rep. Jared Huffman, D-Calif., the ranking member of the House Natural Resources Committee, was quick to point out in an interview that liquefied natural gas prices have also spiked. Though U.S. increases have been modest so far, global LNG supply has been squeezed by a shutdown in Qatar — one of the world’s top LNG-producing countries. Natural gas is the largest electricity generator in the U.S., which is critical as the booming data center industry stresses the electric grid and increases utility costs.

“I think what American families have been feeling most acutely for the past year-plus is their energy bills, their utility bills rising,” Huffman said. “A big part of the utility bill increase is that natural gas is getting more and more expensive … a lot of our effort has been pushed into LNG exports instead of strategies that would lower bills for American consumers. That problem is only more amplified by this conflict.”

But a quick operation in Iran is far from certain, and any extended conflict could create an election-year quagmire for Republicans, said Brittany Martinez, executive director at Principles First and a former aide to then-House Speaker Kevin McCarthy, R-Calif.

“If energy prices rise or markets stay volatile, affordability becomes a harder message for Republicans to carry cleanly,” Martinez said. “Republicans will argue that projecting strength abroad prevents greater instability, while Democrats will try to link any sustained price increases to foreign policy decisions. The real question is whether this turns into a prolonged conflict that voters feel in their household budgets.”

Many believe the military intervention in Iran has the potential to drag on, including Sen. Andy Kim, D-N.J., a national security advisor in the Obama White House.

“This administration doesn’t seem to think about this at all,” Kim said when asked about a potential power vacuum keeping the U.S. in the region longer. “The intelligence community has done a whole range of assessments that very much keep me up at night, and the fact that this White House, I assume, read the same things I read and still went through with this, I just find that to be absolutely reckless.”

Complicating matters more for the GOP is that the war in Iran is unpopular. A CNN poll released March 2 found that nearly 60% of those surveyed disapproved of the U.S. taking military action in Iran. That comes as Trump’s economic approval remains underwater: A Fox News poll released March 4 found that 61% of voters disapproved of Trump’s job on the economy.

“We don’t see it as an opportunity, but I do think it’s our responsibility to tell the American people exactly the decision that Donald Trump is making,” said House Democratic Caucus Chair Pete Aguilar, D-Calif. “He’s sending billions of our tax dollars to the Middle East for another war while he’s kicking people off of healthcare and … eliminating nutrition programs.”

Rep. Zach Nunn, an Iowa Republican seeking reelection in a district Cook Political Report with Amy Walter has labeled a “toss up,” said he is not concerned the war could drown out the GOP’s affordability message. He pointed to the sprawling tax and spending bill that was signed into law last year, increased domestic energy production, and housing legislation that advanced out of the House last month as examples of things the party will use to show action on rising costs.

War in the Middle East does not necessarily preclude Republicans from continuing to try to bring prices down, he argued.

“A more fulsome conversation would be, how do we make sure that we still deliver on affordability?” Nunn said in an interview. “I think this is the absolute right spot for us to be in.”

But Trump, the “America First” president who campaigned on ending the U.S.’s foreign entanglements, risks alienating his base with his Iran offensive. Democrats see the war as evidence of what they have been telling voters about Trump all along: he does not care affordability.

“We have a president who has campaigned on ending forever wars, and he has jumped into war without justification or explanation to the American people,” said Rep. Suzan DelBene, D-Wash., chair of the Democratic Congressional Campaign Committee. “So this has been broken promise after broken promise. This has been at the expense of the needs of everyday Americans. And I do think voters will hold them accountable in November.”

A prolonged surge in natural gas prices triggered by the ongoing war in the Middle East risks denting European growth and hitting some Asian economies hard, analysts have warned.

Global gas prices have soared this week amid fears of a lengthy disruption to energy flows through the Strait of Hormuz — a key shipping route running between Oman and Iran that handles about one-fifth of global LNG trade — as the Iran conflict escalates.

Dutch Title Transfer Facility (TTF) futures, Europe’s benchmark gas contract, rose 35% on Tuesday to more than 60 euros ($69.64) per megawatt-hour. On the week, prices are around 76% higher.

The Northeast Asia LNG benchmark, the Japan-Korea-Marker (JKM), which captures deliveries to Japan, Korea, China and Taiwan, reached a one-year high, and was last seen around 43 euros per megawatt-hour. U.K. natural gas was also sharply higher.

Qatar, one of the world’s largest LNG producers, halted production on Monday following Iranian drone strikes at Ras Laffan Industrial City and Mesaieed Industrial City. Goldman Sachs estimated the pause will reduce near-term global LNG supply by about 19%.

A senior Iranian Revolutionary Guard official later said the country had closed the Strait of Hormuz to all ships, and warned that any vessel attempting to pass through the channel would be attacked. The U.S., however, said the route remained open, according to a Fox News report.

Europe and much of Asia are more heavily exposed to potential gas price shocks than the U.S., which benefits from both domestic shale and LNG production.

Around 25% of Europe’s total gas supply is LNG, according to Chris Wheaton, oil and gas analyst at Stifel. With roughly 20% of global LNG production sitting behind the Strait, a prolonged disruption could trigger a supply squeeze comparable to the 2022 shock following Russia’s invasion of Ukraine, he said in a note.

“We are much more concerned about European gas prices than we are about oil prices,” Wheaton said.

Shares of Norwegian energy giant Equinor, one of Europe’s largest natural gas suppliers, hit a 52-week high on Tuesday, adding more than 2%, after closing the previous session up more than 8%.