The Israeli and American attacks on Iran provoked Iranian attacks on Gulf oil and natural gas producing neighbors. Iran effectively blocked the Strait of Hormuz through which up to a quarter of all petroleum products used across the world pass. This combination of events drove the price of Brent crude oil from the $60 range to well over $100 a barrel. The price of West Texas Intermediate crude oil futures likewise rose from the $60 range to nearly $100 a barrel. These prices have risen and fallen by the day and even by the hour as events in the war and potential resolutions come and go. Such high oil prices are having a devastating effect on the world economy. How long will high oil prices last and will and end to the conflict with Iran provide any immediate remedy.
Effects of High Oil Prices on the World Economy
When the price of crude oil and natural gas go up so does inflation. Higher energy prices make it more expensive to produce and ship goods. Because ammonia used for fertilizer is derived from natural gas the price of food goes up both because farm equipment uses fuel and fertilizer becomes more expensive. The sum total of effects of high energy costs result in economic stagnation. It is of note that whenever energy prices go up producers raise their prices and pass on the cost to consumers. When energy cost subside it is rare to see producers pass those savings back to consumers thus prolonging the inflation effect of high energy prices.
How Much Has Gulf of Persia Energy Infrastructure Been Damaged?
As noted by the House of Saud website, hundreds of billions of dollars of infrastructure has been damaged by the Iran energy war. As the website notes, mines laid in the Strait of Hormuz can be swept and removed. Damage to oil wells and be repaired over months or a year. Damaged oil tankers can be repaired or replaced within a few years. However, damage to the two Saudi oil refineries, the huge Qatar LNG complex responsible for a fifth of all liquid natural gas, Qatar’s Ras Laffan Industrial City, the sprawling complex north of Doha that houses the world’s largest LNG export facilities, and similar damage to processing infrastructure took decades and hundreds of billions to develop and will take a decade or more to repair or replace. Thus the lingering effects of the war will keep oil and natural gas prices higher for the indefinite future!
Are There Investment Possibilities Related to the Iran War?
In September of 2025 Exxon stock sold for $115 a share and the Iran war sent the price over $150 a share. Providing that Iran is not able to attack and damage Exxon’s assets across the globe and in the USA the company is likely to see its share price remain high for perhaps a long as it takes for the Gulf nations to repair their infrastructure, namely a decade or more. Chevron stock has gone up and presents a similar investment opportunity to Exxon. Companies poised to help repair or rebuild Gulf oil and natural gas infrastructure include Haliburton, Saipem (Italian), Baker Hughes, Flor, Petrofac, and McDermott. In addition to repairing Gulf facilities it highly likely that Saudi Arabia will prioritize upgrading the pipeline to the Red Sea to reduce reliance on the Strait of Hormuz. Firms gaining such a contract will also benefit as the Saudis race to replace lost production, processing, and revenue.
Will Renewable Energy Benefit from the Iran Conflict Damage?
Although it would be impossible to ramp up solar and wind power energy infrastructure fast enough to drive down energy costs in the near term or to prevent associated economic damage, the hand writing is on the wall for many nations badly hurt by the current conflict. For the patient investor investment in companies that work in this niche including First Solar, Brookfield Renewable Partners, Enphase Energy, JinkoSolar and Sunrun may well be excellent long term investments.
Drones and the Future of Warfare
The Iran war has shown how $20,000 drones can inflict serious damage as Iran attacks Gulf neighbors who have had to use $4,000,000 Patriot missiles to shoot them down. Meanwhile in Ukraine the Ukrainians are using $2,000 drones to shoot down $20,000 Russian drones, copies of Iran’s drones. Swarming tactics with drones and use of drones for battlefield surveillance have become part and parcel of the war in Ukraine which has become the world leader in the use of these tools of war. Looking ahead one might consider companies that make and perfect both these vehicles and the AI controls as alternatives to Lockheed Martin, Boeing, and other defense contractors as investment opportunities.