Nicole Lapin

Brent crude, the international oil benchmark, jumped nearly 9% to hit nearly $80 a barrel.

That's the highest price it's been in over a year.

And oil had already climbed 17% this year before the strikes even started.

Traders saw the U.S.

military buildup and thought something like this would be coming.

Let me break down the basic economics behind the trade.

Oil is a global commodity and its price is driven by supply and demand.

When a conflict breaks out in the Middle East, traders immediately start pricing in risk that supply could be disrupted.

It doesn't matter if a single barrel has actually been taken off the market yet.

The fear of disruption is enough to send prices higher because markets trade on expectations.

Iran produces nearly 1.6 million barrels of oil per day.

Add that to the threat of the Strait of Hormuz being blocked, and suddenly the market is staring at a potential supply shock with no easy replacement.

Less supply, same demand, higher price.

That's the equation that's playing out right now.

The spike in crude has a direct and unpleasant downstream effect for gas prices.

When refineries pay more for oil, you pay more at the pump, usually within days to weeks.

And this is on top of an already fragile economic environment.

Friday's wholesale inflation data came in at 2.9%, nearly double what economists were expecting.

So we've got war-driven energy inflation stacking on top of pre-existing inflationary pressure, and that is not a great combination.

While this is a big escalation in the Middle East, there has been a long history of conflict.