Why do oil prices jump when conflict starts?

Traders fear supply will be cut

Wars and oil prices

A war far away can change what you pay for a bus ride. About a third of the world's oil comes from the Middle East, and about a fifth of the oil the world uses sails through one narrow strait: Hormuz.
When conflict threatens supply, oil jumps before a single barrel is lost: traders price in the risk. Gold and the US dollar often rise too, as investors look for safety.
In August 1990 Iraq invaded Kuwait. Oil more than doubled in about three months, from under US$20 a barrel in July to around US$40 in October.
WTI oil in 2022. When Russia invaded Ukraine on 24 February, it was about US$92 a barrel. On 8 March it closed near US$124, and Brent briefly hit about US$139.
Pricier oil → pricier fuel and transport → pricier food and goods. Big importers like India, Japan and Europe pay more; exporters like Saudi Arabia and Norway earn more.
Common mistake
Myth: once a war starts, oil stays high. Reality: spikes often fade if oil keeps flowing. By August 2022 WTI was back near US$90, close to where it was before the invasion.
Key takeaway
Wars move oil through fear of lost supply. Spikes can be sharp and short, but they reach everyone's fuel and food bills.

Why do oil prices jump when conflict starts? Traders fear supply will be cutPrices react to the risk of losing supply, often before any oil is actually lost.
Higher oil prices usually make transport and food... More expensiveFuel is a cost in moving and making almost everything, so it feeds into many prices.
In a crisis, investors often buy... GoldGold is a classic safe haven that investors turn to when they're scared.
Oil jumps because of a war. What usually happens to a big oil importer like India? Its fuel import bill risesIndia buys most of its oil abroad, so higher prices mean paying more for the same barrels.