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.

The International Energy Agency on Wednesday agreed to release 400 million barrels of oil to address the supply disruption triggered by the Iran war, the largest such action in the organization’s history.

The IEA did not set out a timeline for when the stocks would hit the market. It said that the reserves would be released over a timeframe that is appropriate to the circumstances of each of its 32 member countries.

“The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA Member countries have responded with an emergency collective action of unprecedented size,” IEA Executive Director Fatih Birol said in a statement.

“Oil markets are global so the response to major disruptions needs to be global too,” Birol said. “Energy security is the founding mandate of the IEA, and I am pleased that IEA Members are showing strong solidarity in taking decisive action together.”

Energy analysts warned ahead of the release that even the IEA’s maximum drawdown capability would likely not be able to offset the nearly 20 million barrels per day that typically transits through the Strait of Hormuz.

The waterway is a narrow maritime corridor off Iran’s coast that connects the Persian Gulf and the Gulf of Oman. Roughly 20% of global oil and gas usually passes through it.

Oil prices have been extremely volatile since the outbreak of the Iran war on Feb. 28, with global benchmark Brent crude rallying to nearly $120 a barrel at the start of the week, before falling back below $90.

Earlier in the day, Japanese Prime Minister Sanae Takaichi said the country intended to release oil stockpiles from its national reserves as early as next week, citing an “exceptionally high level of dependence” on the Middle East.

“Without waiting for an official decision on the release of international stockpiles in cooperation with the International Energy Agency (IEA), Japan has decided to take the lead in releasing its stockpiles as early as the 16th of this month in order to ease supply and demand in the international energy market,” Takaichi told reporters, according to public broadcaster NHK.

IEA members currently hold more than 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.

The global energy watchdog had previously released an estimated 182 million barrels of oil to support the energy market following Russia’s full-scale invasion of Ukraine in 2022.

This is a developing story. Check back for updates.

A cargo ship in the Strait of Hormuz has been struck by an unknown projectile, causing a fire onboard, the United Kingdom Maritime Trade Operations said in an update on Wednesday morning.

The strike forced the crew of the ship, which has not been identified, to evacuate, the UKMTO said. It urged vessels to transit with caution and report any suspicious activity while authorities continue to investigate.

The incident took place 11 nautical miles north of Oman in the Strait of Hormuz. The UKMTO said there is no report of any environmental impact.

Shipping traffic through the strategically vital Strait of Hormuz has ground to a near standstill since the U.S. and Israel launched airstrikes on Iran on Feb. 28. Iran has retaliated by targeting ships trying to pass through the strait, with multiple incidents reported in recent days.

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

U.S. forces sank several Iranian ships on Tuesday, including 16 minelayers, near the Strait of Hormuz, according to U.S. Central Command. The update followed an earlier announcement from U.S. President Donald Trump that said if Iran had put any mines in the waterway, “we want them removed, IMMEDIATELY!”

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Senate Democrats on Tuesday rebutted President Donald Trump’s claims that the war in Iran may soon be over, warning that the U.S. risks getting dragged into another prolonged conflict in the Middle East.

The concerns from Democrats who attended a bipartisan classified briefing with military brass on Tuesday stand in stark contrast with the president, who on Monday suggested the U.S. may be nearing the completion of its operation. Trump’s statements sent slumping markets soaring and cratered oil prices that had skyrocketed in recent days.

The senators were briefed as the Trump administration continues to whipsaw between explanations, goals and timelines for the war that has seen eight U.S. service members killed in action and left the longtime leader of Iran, Ayatollah Ali Khamenei, dead.

“What I heard is not just concerning, it is disturbing,” Sen. Jacky Rosen, D-Nev., a member of the Senate Armed Services Committee, whose members were briefed. “I’m not sure what the endgame is or what their plans are. … And if he does want to put us in a forever war, which it seems like he does, he needs to come out and let us be able to have that discussion.

“Do you think because he thinks he waves some magic wand that everything just stops? … It’s not going to stop just because he wishes it to be so,” Rosen said.

The pessimism from Democrats on an eventual U.S. end for the war it started with Israel against Iran comes as Congress awaits a potential supplemental funding request to finance the offensive. The effort has burned through billions of dollars of U.S. munitions, which will have to be refilled. Some Democrats said they would resist any request for further funding. Democrats have also balked at Trump failing to seek congressional authorization to begin the war.

“At this point, I am a hard no on a supplemental,” said Sen. Elizabeth Warren, D-Mass., the top Democrat on the Senate Banking Committee. “No more money. The one thing Congress has the power to do is to stop actions like this through the power of the purse.”

“This is not a war supported by this country, and this is not a war that makes us safer,” Warren said.

Lawmakers exiting the meeting said the size of the potential supplemental package was not given. Republicans, who hold a 53-47 vote majority in the Senate, appeared willing to support more funding for the war when they left the briefing.

“Not in total dollar amounts that I’ve heard,” said Sen. Jim Banks, R-Ind. “Obviously, there’s a cost to it, but the trade-off is exponentially more, and this has been a very effective operation so far.”

“We need to do whatever it takes to accomplish the mission and do it as fast as we can,” Banks said.

The Washington Post on Monday reported that the military burned through $5.6 billion in munitions in the first two days of the war that began Feb. 28. Washington-based bipartisan think tank the Center for Strategic and International Studies estimates that the war is costing roughly $891 million per day.

Sen. Tim Sheehy, R-Mont., a former Navy Seal, suggested the cost is worth it.

“Iran’s been at war with us for 47 years; we’re trying to end this war,” Sheehy said, referencing the years since the Iranian regime came to power. “We’ve had two presidential administrations give billions of dollars to Iran, that’s what really cost [money].”

Trump and Defense Secretary Pete Hegseth have painted a different picture of the timeline of the war than Democrats say they fear. Hegseth, at a press briefing earlier Tuesday pledged the U.S. will not enter another prolonged conflict in the Middle East, and Trump on Monday said the war would end “very soon.”

War costs are expected to only grow as the war drags on, and Democrats are warning there is no end in sight. The war dragging on could also see markets whip back and oil costs continue to soar, especially as the Strait of Hormuz, which carries roughly 20% of the world’s oil remains largely impassible.

Sen. Tim Kaine, D-Va., said there was “no discussion” about the safety of passing through the Strait during the briefing while he was in attendance.

Sen. Mark Kelly, D-Ariz., a retired Navy captain, also said the U.S. doesn’t appear to be nearing the end of the war after leaving the meeting.

“Clearly, they do not have a strategic goal,” he said. “They didn’t have a plan, they have no timeline. Because of that, they have no exit strategy.”

Correction: This story has been revised to reflect that Sen. Tim Sheehy, R-Mont., is a former Navy SEAL. A previous version misidentified the branch of the military in which he served.

Analysts warned on Monday that there was no precedent for the surging price of oil, as the Middle East crisis deepens fears of prolonged production shut-ins and disruption to shipments through the strategically vital Strait of Hormuz.

Oil prices were on track for their biggest-ever jump in a single day on Monday, before significantly paring gains, following a fresh wave of U.S. and Israeli strikes across Iran over the weekend. Oil depots were among the targets.

International benchmark Brent crude futures with May delivery traded 12.8% higher at $104.53 per barrel on Monday morning, while U.S. West Texas Intermediate futures with April delivery were last seen nearly 12% higher at $101.76.

Brent futures had climbed as high as $119.5 per barrel earlier in the trading day, while WTI hit a session high of $119.48.

Neil Atkinson, former head of oil at the International Energy Agency, said the effective closure of the Strait of Hormuz is something energy markets had never seen before. Unless something changes very soon “we are in a potentially game-changing and unprecedented energy crisis,” he told CNBC on Monday.

Countries across the oil-rich Middle East region have started to scale back crude output. Iraq and Kuwait have already begun to shut-in production, with analysts warning that the United Arab Emirates and Saudi Arabia may also be vulnerable if the Strait of Hormuz remains closed for a sustained period.

“Though there are oil stocks around the world, the point is that if this closure of the Strait persists, those oil stocks if they are deployed will be depleted and we are going to be in a situation where, with the oil production actually shut in, in Iraq and possibly in Kuwait and maybe even in time in Saudi Arabia, that we are going to be in a crisis the likes of which we have never seen before,” Atkinson told CNBC’s “Squawk Box Europe.”

Asked what this could mean for oil prices, Atkinson replied: “Sorry, we are getting into the realms of educated guesswork here. I mean, there is no precedent for this. The sky is the limit.”

Typically, about 20% of the world’s oil and gas passes through the Strait of Hormuz, but shipping traffic has all but halted through this key maritime corridor since the war started.

Oil prices came off their session highs on Monday shortly after the Financial Times reported that finance ministers from G7 economies would hold an emergency meeting on Monday to discuss a possible joint release of petroleum from reserves coordinated by the IEA.

The U.K.’s Treasury and French government confirmed to CNBC that the call would take place on Monday.

Tyler Goodspeed, chief economist at ExxonMobil, told CNBC’s “Squawk Box Europe” on Monday that it had been “consensus last week, and to a certain extent still today,” that everyone but Russia had “an interest in normal traffic resuming through the Strait of Hormuz.”

He added the consensus had been that there was “abundant oil on the water and some strategic reserves to cover any short-term gap.” Goodspeed said he was skeptical of this view as the conflict enters its second week.

“When I think of the probability distribution of possible outcomes here, it seems to me there are many more scenarios, and more probable scenarios, in which the strait remains effectively closed harder for longer than there are scenarios in which normal traffic resumes,” Goodspeed said.

Analysts at Societe Generale, meanwhile, warned that prolonged production shut-ins from Middle East countries “materially increase” the risk of restart complications.

“The UAE is likely the next producer at risk of shutting in output, potentially within the next five to seven days,” the analysts said in a research note published Monday.

“Qatar is also vulnerable, though its oil volumes are modest relative to its LNG exposure. Saudi Arabia faces less immediate risk but shut ins would become plausible if the Strait of Hormuz remains closed for a further two to three weeks,” they added.

— CNBC’s Holly Ellyatt contributed to this report.

Iran’s Kharg Island, a small but strategically vital strip of land nestled in the waters of the northern Persian Gulf, has been left untouched by U.S. and Israeli forces even as the Middle East conflict enters its second week.

The coral island, which is located about 15 miles off the coast of mainland Iran, serves as the centerpiece for Iran’s oil industry.

It is estimated that around 90% of the country’s crude exports pass through it before tankers then travel through the Strait of Hormuz. The island is also said to have a loading capacity of roughly 7 million barrels per day.

Kharg Island’s economic importance to Iran makes it particularly vulnerable to the threat of military action, although analysts say that any attempt to seize it would likely require a ground troop operation, which the U.S. appears reluctant to undertake.

An attack would also likely prompt further energy market volatility at a time when oil prices have soared to more than $100 a barrel.

Seizing the island “would cut off Iran’s oil lifeline,” which is essential for the regime, according to Petras Katinas, a research fellow in climate, energy and defense at RUSI, a London-based defense think tank.

“Of course, with shipping via the Strait of Hormuz now stopped, they cannot sell oil anyway, but looking ahead, seizure would give the US leverage during negotiations, no matter which regime is in power after the military operation ends,” Katinas told CNBC by email.

“Yet, seizure, would require a ground troop operation, which this administration seems hesitant to undertake. At least for now,” he added.

Crude futures climbed to their highest level since mid-2022 on Monday after the U.S. and Israel launched a fresh wave of strikes across Iran over the weekend.

The attacks struck several Iranian fuel sites, including oil storage depots, signaling a new phase of the war as the sprawling Middle East crisis continues into its tenth day.

International benchmark Brent crude futures with May delivery traded nearly 16% higher at $107.18 per barrel on Monday morning, paring earlier gains, while U.S. West Texas Intermediate futures with April delivery were last seen 12.5% higher at $102.1.

“If President Trump were to decide to seize this pivotal hub, it would deal a significant blow to the Iranian regime, as it would deprive them of a critical source of revenue. Such a move would be reminiscent of the U.S. intervention in Venezuela at the beginning of the year, when it effectively took control of the country’s oil sector,” Tamas Varga, an oil analyst at brokerage PVM, told CNBC By email.

An attempt to seize the island would require U.S. troops on the ground and likely see it become a multi-week target for Iranian drones, Gustafson said in a LinkedIn post last week.

He also warned it could push oil prices up even further and Tehran may even consider an act of self-sabotage to destroy the oil pipeline that feeds it.

“There is one concept or one dimension of this that no one seemingly has mentioned, which is Kharg Island,” Jan van Eck, CEO of VanEck Funds, told CNBC’s “Power Lunch” on March 2.

“It’s where 90% of Iran’s oil gets exported out of — that is a choke point. And if you think that Trump just follows the same playbook that he did in Venezuela. What did he do? He cut off their oil exports, their hard currency, and I think he is going to want that leverage point going forward,” Van Eck said.

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.”

President Donald Trump said in a social media post on Friday that there would be no deal to end the U.S. war against Iran without an “UNCONDITIONAL SURRENDER” by Iran.

The Dow Jones Industrial Average dropped more than 900 points, or nearly 2%, after Trump’s demand, which he wrote on Truth Social. The S&P 500 and Nasdaq Composite fell 1.6% each, and oil futures prices rose.

Trump said that after a surrender and “the selection of a GREAT & ACCEPTABLE Leader(s), we, and many of our wonderful and very brave allies and partners, will work tirelessly to bring Iran back from the brink of destruction, making it economically bigger, better, and stronger than ever before.”

“IRAN WILL HAVE A GREAT FUTURE. “MAKE IRAN GREAT AGAIN (MIGA!)” Trump wrote.

Trump’s demand came as Iran has yet to pick a leader to replace Supreme Leader Ayatollah Ali Khamenei, who was killed last weekend in an airstrike at the beginning of the war by the U.S. and Israel.

White House Press Secretary Karoline Leavitt, when asked by reporters later about potential future leaders of Iran, said, “I know there are a number of people that our intelligence agencies, that the United States government are looking at, but I won’t get any further.”

Trump in June made an identical demand of “UNCONDITIONAL SURRENDER” by Iran in another social media post as he considered launching a military strike against that nation.

The futures price of the global benchmark Brent crude oil rose, breaking $90 per barrel, after Trump posted his latest demand for Iran to surrender without conditions.

Qatar’s energy minister, Saad al-Kaabi, warned Friday that rising oil prices due to the war against Iran “could bring down the economies of the world.”

Al-Kaabi told The Financial Times that crude oil prices could hit as high as $150 per barrel within weeks if tankers cannot pass through the Strait of Hormuz. The last time oil topped $100 a barrel was when Russia invaded Ukraine in 2022.

Oil prices rose on Friday morning as investors continued to assess the impact of the U.S.-Iran war on global energy markets.

By 6:58 a.m. ET, global benchmark Brent crude futures added 4.5% to trade at $89.23 a barrel, notching a fresh 52-week high and levels not seen in nearly two years. U.S. West Texas Intermediate crude futures were last seen 6.3% higher at $86.06, hitting their highest level since April 2024.

Prices dipped overnight as investors continued to assess the impact of the U.S.-Iran war on global energy supply.

Crude prices are on track for their biggest weekly gain since Russia’s full-scale invasion of Ukraine in early 2022.

The spike comes as the U.S.-Iran conflict spreads across the Middle East, disrupting energy production and bringing traffic in the Strait of Hormuz, a critical shipping route, to a near standstill.

On Friday morning, the Financial Times reported that Qatar’s energy minister said the war in the Middle East could see Gulf energy exporters stop shipments within days. Saad al-Kaabi told the FT that crude prices could reach $150 a barrel in the coming weeks if oil tankers were unable to pass through the Strait of Hormuz.

Prices briefly dipped overnight after the U.S. issued a 30-day waiver to India — the world’s third-largest oil importer — to resume purchases of Russian oil. Washington had earlier imposed 25% “penalty” tariffs on India for buying Russian crude, which were revoked last month. The retreat in prices also came after news agency Reuters, citing an unnamed White House official, reported that the U.S. Treasury is planning to announce measures to curb energy price spikes, including potential interventions in the oil futures market.

The average price for a gallon of regular gasoline jumped nearly 27 cents since in the week to Thursday to $3.25, according to data from U.S. travel organization AAA.

The conflict between Iran and the U.S. enters its seventh day on Friday. In a press conference on Thursday, U.S. Defense Secretary Pete Hegseth said the U.S. had “only just begun to fight.”

“Iran is hoping that we cannot sustain this, which is a really bad miscalculation,” he told reporters.

“There’s no shortage of American will here … If you think you’ve seen something, just wait. The amount of combat power that’s still flowing, that’s still coming, that we’ll be able to project over Iran is at multiples of what it currently is right now when you add up our capabilities and those of the Israeli Defense Forces.”

“Contrary to what consensus thinks, I think higher energy prices could actually be deflationary for the U.S.,” Atakan Bakiskan, chief U.S. economist at Berenberg, told CNBC’s “Squawk Box Europe” on Friday.