Global oil markets are bracing for sharp turbulence after the United States confirmed it has launched "major combat operations" in Iran, raising fears of supply disruptions and sending war-risk insurance costs soaring for vessels transiting the Strait of Hormuz.

War-risk insurers on Saturday issued cancellation notices for ships traveling through the Gulf and the narrow waterway that handles roughly one-fifth of the world’s crude oil flows. 

Brokers said premiums could jump as much as 50% in the coming days, underscoring the rapid escalation following U.S. and Israeli strikes on Iranian targets and retaliatory attacks by Tehran on American bases across the Middle East.

The unusual step of submitting cancellation notices before markets reopen reflects mounting anxiety among insurers that Iran could attempt to close or disrupt traffic through the strategic choke point of the Strait of Hormuz.

Some underwriters are also pricing in the possibility that Iranian proxies may try to board or seize vessels in the region.

Shipping data suggests owners are already reacting. 

At least three vessels reportedly turned away from the Strait of Hormuz on Saturday as operators reassessed risks. 

Advisory firm EOS Risk said some ships received radio warnings appearing to come from Iran’s Revolutionary Guard claiming the passage was closed.

Oil markets, closed over the weekend, are expected to respond swiftly when trading resumes.

International benchmark Brent crude ended Friday at a seven-month high of $72.87 per barrel. 

Analysts say prices could spike $5 to $10 on fear alone if hostilities remain contained and oil infrastructure is spared.

However, in a worst-case scenario involving sustained disruption of tanker traffic through the Strait of Hormuz, crude could push past $90 per barrel. 

Such an outcome would likely send U.S. gasoline prices well above $3 per gallon from a recent national average of $2.98, according to AAA.

"Iran is a choke point story," said Kenneth Goh of UOB Kay Hian in Singapore, contrasting the situation with prior geopolitical flare-ups. 

About 20 million barrels of oil and refined products pass daily through the strait, including exports from Saudi Arabia, Iraq, and the United Arab Emirates. 

Any prolonged interruption would reverberate across global supply chains.

Iran itself exports between 1.6 million and 1.9 million barrels per day, much of it to China. 

Analysts note that while sanctions have constrained Iranian exports, Beijing’s refiners — particularly independent operators — continue to purchase Iranian crude. 

A supply disruption would likely force Chinese buyers to seek alternative sources on the global market, adding upward pressure on prices.

Still, some experts argue that Iran has limited incentive to fully close the strait, as doing so would choke off its own exports and risk alienating China, its primary customer. 

Instead, markets are focused on the scale and duration of the conflict.

Market strategists expect a "risk-off" tone when trading resumes Monday, with equities potentially falling 1% to 2%, U.S. Treasury yields declining, and safe-haven assets such as gold and the Japanese yen strengthening. Oil could jump 5% to 10% in early trading if uncertainty intensifies.

The broader economic implications hinge on whether the U.S. campaign remains limited to targeted strikes on Iran’s nuclear and military infrastructure or escalates into a prolonged regional conflict. 

A short, contained operation could result in a brief spike in oil and insurance costs before stabilizing. But a multi-week conflict — particularly one involving attacks on Gulf energy facilities — would likely drive sustained price increases and rattle global markets.

For now, insurers appear poised to renegotiate rather than withdraw coverage entirely, signaling that shipping through the Gulf will continue — albeit at a significantly higher cost.