Recent statements from the Iranian military indicate new developments over the weekend: according to an Iranian military source, the country's domestically produced air defense system successfully struck a U.S. F-35 fighter jet. Iran is expected to demonstrate new capabilities for countering adversaries in the coming days. In a separate report, a Royal Navy nuclear-powered submarine has arrived in the Arabian Sea. If authorized by the UK Prime Minister, British forces are prepared to issue firing commands to the vessel.

On the evening of the 21st, the Saudi Arabian Ministry of Foreign Affairs issued a statement demanding that Iranian military attachés leave the country within 24 hours. The statement condemned Iran’s attacks on Saudi Arabia and other regional nations, affirming that Saudi Arabia “will not hesitate to take all necessary measures to protect its sovereignty and ensure national security.”

This week, Goldman Sachs and Citigroup warned that if Middle East conflicts persist, crude oil futures could surpass the 2008 record high of $147.50 per barrel in the coming weeks.

**Iran: Domestic Air Defense System Downs U.S. F-35** According to a report from Iran’s Tasnim News Agency on the 21st, cited by Xinhua, a U.S. F-35 was hit by an Iranian-made air defense system. A military source stated, “The U.S. had previously presented the F-35 as a showcase of its military technology, but this attack was carried out by Iran’s air defense system.” The source added that the U.S. and Israel believed no air defense system could track and strike the F-35, but Iran’s domestic system surprised them. The source also indicated that Iran would soon reveal new capabilities for confronting enemies.

On the 19th, Iran’s Islamic Revolutionary Guard Corps announced it had struck a U.S. F-35 stealth fighter, causing significant damage. CNN reported on the same day that a U.S. F-35 made an emergency landing after疑似 being hit by Iranian fire.

On the 21st, IRGC Navy Commander Alireza Tangsiri stated on social media that the Iranian Navy used numerous ballistic missiles and suicide drones to destroy facilities at the Minhad Air Base in the UAE and the Ali Al Salem Air Base in Kuwait, including hangars and fuel depots used by U.S. and Israeli aircraft. Tangsiri noted that previous attacks on Iranian islands originated from these bases.

In the early hours of the 22nd, Iran’s Khatam al-Anbiya Central Headquarters warned that, as previously indicated, if Iran’s fuel and energy infrastructure were attacked, all energy facilities, IT systems, and desalination plants belonging to the U.S. and its allies in the region would become targets. Earlier, former U.S. President Donald Trump had threatened Iran, demanding it open the Strait of Hormuz within 48 hours or face the destruction of its power plants.

**UK Nuclear-Powered Submarine Arrives in Arabian Sea** According to reports citing military sources on the evening of the 21st, a Royal Navy nuclear-powered submarine capable of launching cruise missiles has arrived in the Arabian Sea. The vessel, identified as the HMS Anson, is equipped with Tomahawk missiles and Spearfish torpedoes and is believed to be deployed in deep waters north of the Arabian Sea. Military sources stated that if authorized by the UK Prime Minister, the submarine would be given orders to open fire.

On the 20th, the UK government issued a statement allowing the U.S. to use its military bases to degrade Iran’s missile capabilities used for “attacking ships in the Strait of Hormuz,” while reiterating that the UK would avoid being drawn into a “broader conflict.”

Also on the 20th, several U.S. officials reported that Iran launched two medium-range ballistic missiles toward the joint U.S.-UK military base on Diego Garcia in the central Indian Ocean. One missile reportedly failed mid-flight, while a U.S. warship launched an interceptor at the other—though it remains unclear whether the interception was successful. Additional reports indicated that the two missiles, launched from approximately 4,000 kilometers away, did not hit the base. This demonstration suggests Iran’s military reach extends far beyond the Middle East.

The Chagos Archipelago, located about 750 kilometers northeast of Mauritius in the southwestern Indian Ocean, was ceded to British colonial authorities in 1965. The following year, the UK leased the main island, Diego Garcia, to the U.S. for an airbase. On May 22, 2025, the UK and Mauritius signed an agreement formally transferring sovereignty of the Chagos Islands to Mauritius, under which the Diego Garcia base would be leased to the UK and U.S. by Mauritius.

Former President Trump had suggested the U.S. might use the airfield on Diego Garcia against Iran, but the UK initially refused, citing international law. On March 1, UK Prime Minister Keir Starmer stated that the U.S. would be permitted to use the base for “specific and limited” defensive purposes.

**Ripple Effects of Soaring Oil Prices** Since the outbreak of conflict in the Middle East, international benchmark Brent crude and U.S. benchmark West Texas Intermediate futures have surged, both rising more than 40% compared to a month ago. Brent has stabilized above $100 per barrel, while WTI hovers around $98.

Refined products such as gasoline, diesel, and jet fuel have seen even sharper price increases, putting pressure on multiple market sectors. Diesel prices, in particular, have risen faster than crude, driving up transportation costs for U.S. manufacturers, retailers, and agricultural exporters—costs that are ultimately passed on to consumers.

According to Bloomberg, the U.S. national average diesel price exceeded $5 per gallon in early March for the first time since 2022, up from below $3.80 before the conflict. In a recent client note, Bank of America analyst Lorraine Hutchinson wrote that diesel price increases would “quickly reflect” in the U.S. trucking industry, squeezing profits for businesses reliant on domestic freight transport.

Bank of America analyst Ken Hoexter noted on Thursday that transportation stocks under his coverage had fallen an average of 12% since the conflict began. Meanwhile, analysts are increasingly concerned that supply disruptions fueling the oil price surge may last longer than initially expected. Damage to energy infrastructure and disruptions to major shipping routes have led forecasters to warn that crude prices could climb further if transport constraints continue.

Hoexter added, “While rising fuel costs are often viewed as a temporary pass-through expense that can be recouped via fuel surcharges, the potential for prolonged conflict raises concerns about near-term demand erosion.”

For buyers of refined products like jet fuel, the key questions are duration: How long will the conflict last? How long will it disrupt global oil flows? How high will prices go?

According to energy industry officials and Wall Street strategists, oil prices could rise significantly further. The Wall Street Journal reported that Saudi officials now predict Brent futures could reach $180 per barrel if regional supply disruptions continue into late April.

Citigroup’s Global Head of Commodities Research, Maximilian Layton, wrote in a recent report that under the bank’s base case—assuming supply disruptions last four to six weeks—Brent could reach $110 to $120 per barrel. If the conflict persists into June, Layton projected prices could climb as high as $200 per barrel, well above the all-time high of around $147 for Brent.

For businesses dependent on refined products, rising oil prices will mean further increases in the cost of jet fuel, gasoline, diesel, and many other petroleum derivatives.