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(Bloomberg) -- Oil surged the most in four years as tanker traffic all but halted through the Strait of Hormuz and a big refinery in Saudi Arabia stopped, with an escalating conflict in the Middle East threatening supplies in one of the world’s key producing regions.

Brent futures traded about 8% higher after topping $80 a barrel earlier, while diesel futures — the engine of the global economy — jumped more than fifth at one point. Bahrain said a ship was on fire in one of its ports, while at least four vessels were targeted on Sunday. Naval forces in the region described the threat as “critical” and swaths of shipowners aren’t transiting.

How quickly tanker traffic can normalize in Hormuz is critical to energy markets because the waterway handles a fifth of the world’s oil and a similar portion of liquefied natural gas. JPMorgan Chase & Co. estimates that a halt lasting 25 days would fill producer nations’ storage tanks, forcing them to cut production. Insurance markets are already scrambling to work out how to price the risk of transiting.

In one of the first big impacts on physical oil assets, Saudi Aramco halted operations at its Ras Tanura refinery after a drone strike in the area, according to people familiar with the matter, adding to a spike in fuel prices. Crude flows from the nearby port continued.

The publisher of the Middle East’s main oil benchmark said it wont accept bids and offers for some grades inside Hormuz, underscoring exactly how the conflict is upending the pricing of grades that are key to some of the world’s biggest oil benchmarks.

The war marks a dangerous new phase for the Middle East and the global oil market. The US and Israel fired missiles at targets across Iran on Saturday, while urging local people to overthrow the Islamic regime. Tehran responded with a wave of strikes against Israel, as well as US bases and other targets in states including Saudi Arabia, Qatar, the United Arab Emirates, Kuwait and Bahrain. Iran claimed on Monday that it downed a US fighter jet.

The weekend saw a muddied back and forth of claims around Hormuz. Iranian authorities said on Sunday that the waterway remained open, while also claiming attacks on three oil tankers. President Donald Trump, meanwhile, said US forces sank nine Iranian naval ships, and that combat operations would continue until all objectives were completed.

“The longer the war and the blockade persist, the greater the risk that more and more fear will creep into the market,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “We see further upside today.”

While the surge in crude prices was the biggest since early 2022, the path ahead is uncertain. That prices haven’t rallied more is partly a result of an oil market that has been relatively well supplied over the past year or so. There were other supply risks on Monday, with loadings halted at a key Russian oil terminal after Ukrainian drone attacks.

In reaction to the widening conflict, OPEC+ agreed at a pre-arranged weekend meeting to raise quotas next month by 206,000 barrels a day. The group — which includes Iran, as well as Saudi Arabia and Russia — had been expected to resume modest hikes before the outbreak of hostilities on Saturday.

Crude has posted back-to-back monthly gains this year on sustained geopolitical tensions and a series of localized supply snarls. The advance has come despite widespread expectations that the oil market faced a major surplus, after supply hikes by OPEC+ and nations outside the group.

“We see Brent oil trading in the $80-to-$90-a-barrel range in our base case over at least the coming week,” Citigroup Inc. analysts including Max Layton said in a note before the start of trading on Monday.

“Our baseline view is that the Iranian leadership changes, or that the regime changes sufficiently as to stop the war within one-to-two weeks, or the US decides to de-escalate having seen a change in leadership and set back Iran’s missiles and nuclear program over the same time frame,” they added.

Morgan Stanley, meanwhile, raised its second-quarter Brent forecast to $80 a barrel from $62.50.

Iran pumps about 3.3 million barrels a day, or 3% of global output, but the nation wields greater influence over energy supplies given its strategic location alongside the Strait of Hormuz. Oil from the Persian Gulf must pass through the waterway to get to major markets such as China, India and Japan.

In comments to the New York Times, Trump said the US intended to sustain its assault on Iran for “four to five weeks.” He also said he was open to lifting sanctions if the new leadership showed itself to be a pragmatic partner.

In the event that tanker flows through the Strait of Hormuz are not restored quickly, oil could exceed $100 a barrel, according to Wood Mackenzie. Even with OPEC raising production in April, the bloc’s additional volumes and spare capacity will be inaccessible if the waterway remains closed, it said.

The jump in energy costs — if maintained — risks boosting inflationary pressures around the world. That stands to complicate the task facing central bankers including the US Federal Reserve as they seek to manage the pace of price gains, while also supporting growth and employment.