WASHINGTON, July 8 — The relationship between Iran and the United States has long been one of the most reliable drivers of volatility in global oil markets, and the pattern shows no sign of breaking. For decades, every major flashpoint between the two countries has sent crude prices on a jagged ride, a dynamic that began with the 1979 Iranian Revolution. That revolution triggered a global oil crisis, with prices quadrupling almost overnight.
It set a template: when Iran is in crisis, the world’s energy markets lurch. The Iran-Iraq War, which ran from 1980 to 1988, kept supplies disrupted, with oil hitting $38 per barrel in 1980—the equivalent of roughly $120 per barrel when adjusted for inflation.
A brief détente, then a sharp reversal
The 2015 Joint Comprehensive Plan of Action, better known as the Iran nuclear deal, offered a rare period of calm. Under the JCPOA, sanctions were temporarily eased, and Iran’s oil exports climbed to as high as 2.5 million barrels per day by 2016. For a moment, the market could price Iranian oil without a geopolitical risk premium.
That changed in May 2018. The Trump administration withdrew from the JCPOA and reimposed sanctions, and the effect was dramatic.
Iran’s exports cratered from 2.5 million barrels per day to just 0.5 million barrels per day by 2019. The practical upshot: a significant chunk of global supply was suddenly off the table, and prices responded accordingly. Then came January 2020, when a U.S. drone strike killed Iranian General Qasem Soleimani.
Oil prices briefly shot above $70 per barrel. It was a stark reminder that a single targeted operation could rattle markets worldwide.
Sanctions evasion and a fragile ceasefire
By 2023, Iran had found workarounds. Despite U.S. sanctions, its oil exports rebounded to 1.5 million barrels per day, driven largely by sanctions evasion. The market adjusted, but the underlying tension remained.
A ceasefire brokered by Qatar and Oman in 2024 brought some stability. Prices steadied.
But the calm was always conditional, resting on a diplomatic framework that could unravel. The Strait of Hormuz remains the wild card. It is a chokepoint for 20 percent of the global oil supply, and Iran has repeatedly threatened to close it during past crises.
That threat has not gone away; it is simply dormant.
What to watch next
The pattern is clear: every major U.S.-Iran confrontation has produced a spike in oil prices, and the underlying structural risks have not been resolved. Iran’s capacity to disrupt supply, whether through direct action at Hormuz or through proxy conflicts, remains intact. The 2024 ceasefire is a pause, not a permanent solution.
For markets, the question is not whether the next crisis will come, but when. And whether this time, the Strait of Hormuz will be the lever that gets pulled.
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