The U.S. Enters Israel-Iran Conflict: What You Need to Know
On June 22, 2025, the U.S. launched airstrikes on Iranian nuclear facilities, escalating the ongoing Israel–Iran conflict. Here’s how this development could disrupt the U.S. energy market, and what it means for your energy costs.
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Key Takeaways
Growing tensions between the U.S., Israel, and Iran are driving uncertainty across global energy markets, with direct impacts on the U.S. economy and businesses. Rising risk has already pushed oil and natural gas prices higher due to production disruptions, rising transportation costs, and threats to key shipping routes like the Strait of Hormuz. History shows that conflicts of this scale can quickly lead to inflation, volatile energy prices, and tighter operating margins, even when the conflict occurs overseas. While a ceasefire is currently in place, ongoing uncertainty may continue to pressure fuel, electricity, and natural gas markets. For U.S. businesses, staying informed and proactively managing energy risk is essential in a volatile market.
- On June 22, 2025, the United States escalated the Israel-Iran conflict by launching a direct attack on three of Iran’s nuclear facilities.
- Operation “Midnight Hammer” caused damage to Iran’s nuclear facilities and research sites in Fordow, Natanz, and Esfahan.
- The U.S. military strikes did not destroy Iran’s nuclear program; however, it will take months for them to rebuild their facilities.
- Iran has threatened to close the Strait of Hormuz, which could delay nearly a quarter of global oil shipments and 20% of LNG exports.
- The U.S. economy and energy market now face increased volatility as supply chain disruptions and oil and gas risk premiums drive up prices.
- As of June 23, 2025, Iran, Israel, and the U.S. have agreed to a ceasefire, but tensions remain high throughout negotiations.
- Learn more about how this conflict could impact your commercial energy bills, and how to stay ahead of the volatile market with a proactive energy strategy.
How Could Escalating the Iran Conflict Impact the U.S. Economy?
When the U.S. becomes involved in global conflicts, our economy often feels the ripple effects – especially in energy-producing regions like the Middle East. Military action can lead to a less predictable economy, increasing energy prices, tightening lending conditions, and slowing consumer spending. Experts warn that higher oil and gas prices could fuel global inflation, raising the cost of doing business.
Even if the conflict stays overseas, you might still see rising energy bills, shipping fees, vendor rates, or material costs. For businesses across the U.S., building budget flexibility and a proactive energy strategy is the best defense against market uncertainty.
How Could a U.S.-Iran Conflict Impact Oil Prices Today?
The tensions between Israel and Iran have already caused global oil prices to rise. Since early June, tensions between Israel and Iran have caused Brent crude oil prices to rise by 20%. As the global benchmark, Brent reflects broad shifts in the international oil market.
In retaliation to airstrikes, Iran has threatened to close the Strait of Hormuz, one of the most important oil shipping routes in the world. This heavily used trade route handles nearly 25% of global oil traffic, and any disruption could cause prices to spike another 20–30% overnight.
If your business depends on fuel or oil-based feedstocks, consider building a 10-15% buffer into your energy budget. Planning ahead and creating some budget flexibility can help you stay competitive in the face of a volatile market.
Will Natural Gas Prices in the U.S. Also Be Affected?
New Choices Create New Risks
Yes – natural gas prices are already rising due to production cuts in the Middle East. When geopolitical conflict disrupts production in gas-rich regions, prices tend to follow. In response to recent attacks, Israel shut down its offshore gas facilities for safety, while Iran paused production in the South Pars field, one of the largest in the world. These disruptions cut regional output by 10-15%, triggering a 10% spike in global liquefied natural gas (LNG) prices.
As a net exporter of LNG, global prices help determine U.S. wholesale natural gas prices. Experts warn that domestic prices could increase from $3.50 to $4.50 per MMBtu. Regions already struggling with high natural gas rates, such as Ohio and New York, may feel the pinch even tighter.
What Does this Mean for U.S. Energy Prices Overall?
Depending on how Iran chooses to retaliate, our energy supply chain could be at risk. Iran has threatened to close the Strait of Hormuz if attacks continue, which transports nearly 20-25% of the world’s oil supply. If global oil is delayed or rerouted, it will increase prices and potentially lead to shortages.
International shipping and freight rates in the Gulf and Red Sea have already increased by 30% throughout June. These fees are typically bundled into total fuel costs, which are often passed down to consumers and businesses through higher energy rates. If the U.S., Israel, and Iran cannot agree to a ceasefire, this conflict could have lasting effects on the U.S. energy market. Daniel Sternoff from the Center on Global Energy Policy highlights the impact of closing the Strait of Hormuz:
“Any Iranian attempt to close the Strait of Hormuz would be highly risky, exposing it to risks of further U.S. attacks that could imperil the regime. Impeding the Strait would affect not only Iran’s own exports—which are principally consumed by China, one of Iran’s few friends—but also those of Saudi Arabia, the UAE, Kuwait, and Qatar. The impacts could be severe, potentially disrupting 20 million barrels per day (b/d) of crude oil and oil products from global markets, along with 20% of global liquified natural gas (LNG) flows.”
Daniel Sternoff, Economist at the Center on Global Energy Policy
What the Russia-Ukraine War Taught Us About Energy Prices
When Russia invaded Ukraine in 2022, energy prices worldwide spiked almost overnight. International sanctions on Russian energy imports caused oil prices to rise 40%, coal by a shocking 130%, and natural gas prices by a staggering 180%. Henry Hub natural gas prices swung daily between $3.46 and $9.89 per MMBtu, causing a year of expensive, unpredictable energy bills for U.S. businesses.
Can the U.S. Power Grid Handle Another Energy Crisis?
Yes, but some regions of the U.S. are better equipped than others. Areas within the PJM, MISO, and ERCOT electric grids are already operating with very slim capacity margins, leaving little room for additional strain. If rising fuel costs cause natural gas power plants to reduce their output, utilities may be forced to rely on coal-fired power plants, increasing both emissions and electricity costs.
Businesses in high-demand regions should prepare for the impact of summer cooling demands as well as rising costs caused by the Israel-Iran conflict. The combination of limited energy supply, increased seasonal demand, and geopolitical disruptions leads to expensive overhead costs. Stay alert, because conservation alerts or peak-demand pricing events could happen more often this summer. Now is the ideal time to review your business’s energy strategy to make sure your operations are protected.
Will U.S. Businesses Face Power Outages?
Fortunately, our experts don’t forecast any nationwide blackouts as a result of this conflict. However, localized power outages could become more common, especially during peak summer or winter demand. Being mindful about how and when your business uses power can make a big difference in your monthly bills and ease pressure on the grid.
To support a more resilient electrical grid and protect your bottom line, consider:
- Enrolling in a demand-response program.
- Shift high-usage operations to off-peak periods.
- Investing in back-up generators or energy storage systems.
- Installing on-site renewable energy, like rooftop solar with storage.
- Locking in a fixed-rate energy plan before rates rise even further.
- Explore personalized energy management strategies with a commercial energy broker, like Integrity Energy.
Ceasefire Declared — But Is the Conflict Really Over?
On the evening of 6/23/25, President Trump declared a ceasefire in what many are starting to call the “Trump-Iran War”, but the status remains uncertain. Israel’s government has not provided any immediate comments, but launched heavy attacks on Tehran before the ceasefire began. Meanwhile, Iran agreed to the ceasefire, but only after they launched missiles at Al Udeid Air Base in Qatar, the largest U.S. military base in the Middle East.
While the fighting has stopped, tensions remain high. President Trump stated online that now is the best opportunity to “restart a real peace process.” At the same time, the International Atomic Energy Agency held an emergency meeting in Vienna to discuss the damages and de-escalation efforts. These negotiations could either defuse the crisis – or push the region closer to a nuclear tipping point.
“A diplomatic solution is within reach if the necessary political will is there. Elements for an agreement have been discussed. The IAEA can guarantee, through a watertight inspections system, that nuclear weapons will not be developed in Iran. They can form the basis of a long-standing agreement that brings peace and avoids a nuclear crisis in the Middle East. This opportunity should not be missed.”
Rafael Grossi, Director General, International Atomic Energy Agency (IAEA)
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