Markets now see disruptions to the energy markets — the Iran war foremost among them — keeping energy prices elevated well into next year.

Why it matters: Unlike surging spot prices for crude oil — cash paid to get actual deliveries of products ASAP — prices in the energy futures markets have been slower to price in a long-lasting impact of the conflict.

• That could be changing.

The latest: Brent crude futures contracts for April 2027 jumped to more than $85 a barrel this week, the highest since the war began at the end of February and higher than they were during the peak for oil prices back in early May.

Zoom out: The upswing is part of a broader adjustment in market expectations, after drone attacks on an alternative crude oil export route to the Red Sea and attacks on a key pipeline.

• The East-West pipeline, which had been moving as much as 4 million barrels of oil per day to the Saudi Arabian city of Yanbu on the Red Sea, is expected to be out of service for weeks after drone attacks.
• The latest prices of Brent oil futures set for delivery over the next six months or so have jumped higher in recent days. (That's the pink line in the chart above, compared with the same contract prices a week, a month and a year ago.)

What they're saying: "You can see how the curve is actually shifting upward, as we see more escalation," Joe DeLaura, senior energy strategist at Rabobank, tells Axios.

• Traders are now considering an increasing chance of attacks on other diversionary export points, such as the United Arab Emirates' pipeline leading to its export terminal in Fujairah, he says.
• "That's what I see as the next stage of escalation. If those probabilities go from 2% to 5% to 10%, then, yeah, we need to start pricing crude much more aggressively."
• Independent energy analyst Rory Johnston, writer of the Commodity Context Substack, stresses that the main thing the futures curve now shows is extreme tightness in the market for near-term deliveries.
• "But because this crisis has lasted longer, I think the effect is beginning to, kind of, spread further down the curve," Johnston says.
• "You can interpret it as being seen as something that is more generally durable and long-lived. "

Yes, but: Johnston adds that too much shouldn't be read into the movement of the futures curve.

The bottom line: "No one knows what's going to happen. All we know is that we really need crude and diesel today," he says.

Climate change is still melting ice and threatening polar bears, but the conversation at New York's upcoming Climate Week is centered on something much closer to home: the cost of energy.

Why it matters: With the Iran war pushing up energy costs, the AI boom driving power demand and the midterms looming, affordability is becoming a central test for climate action.

Driving the news: Two reports released this morning show how affordability is reshaping the energy transition.

• S&P Global finds the world's most ambitious climate targets increasingly out of reach as energy demand soars in developing economies where affordability and security are cementing their place as top priorities.
• The U.S. Energy Storage Coalition framed its entire report around affordability: Scale batteries rapidly because they'll save money. Its analysis estimates that broad storage deployment could save the U.S. power system at least $250 billion over the next decade.

"This climate week is also going to be energy security week and energy affordability week," said Dan Yergin, vice chairman at S&P Global.

State of play: Affordability isn't new to Climate Week NYC, which begins Sunday.

• But it's especially prominent in this year's official agenda, with sessions focused on delivering power "reliably, affordably, at scale and pace" and one titled, "Climate as growth: how to communicate opportunity, not cost."

By the numbers: Average U.S. residential electricity prices are expected to rise about 5% this year, according to the U.S. Energy Information Administration, though the increase varies by region and the role of AI-driven demand in the increase is hotly debated.

• Regular gasoline now averages $4.44 a gallon, up 39% from a year ago, while diesel has hit a record $6.40, up 73%, according to AAA, as oil-market disruptions deepen from the Iran war.

What we're watching: Impacts of a warming world are also pushing a separate set of costs onto people, further complicating the affordability debate.

• A third of Americans say extreme weather has increased their homeowners or renters insurance premiums or deductibles, according to the AP-NORC/University of Chicago poll.

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