Global oil shock as Iran war shuts down the Strait of Hormuz

Overview

Roughly one-fifth of the world's oil supply passes through the Strait of Hormuz, a waterway barely 21 miles wide between Iran and Oman. Nine days into the joint United States-Israeli war on Iran, that traffic has dropped to near zero — and oil has responded accordingly. Brent crude jumped above $101 a barrel on Sunday, the first time oil crossed the $100 mark since Russia's invasion of Ukraine in 2022, while West Texas Intermediate hit roughly $107. The price of crude has risen about 50 percent since the first bombs fell on February 28.

In This Story

3 Videos

4 People

War grinds on, oil stays above $100 through spring

3 Context

Arab oil embargo (1973-1974)

Key Indicators

$101+

Brent crude per barrel

First time above $100 since July 2022; up roughly 50% since strikes began on February 28

Daily Strait of Hormuz tanker crossings

Down from a normal average of roughly 50 per day; only 3 crossings recorded on March 7

$3.45

U.S. average gasoline price per gallon

Up 21% in one week, ending a 13-week streak below $3.00

-908

Dow Jones futures point drop

S&P 500 futures fell 1.95% and Nasdaq futures dropped 2.39% on Sunday evening

20%

Share of global oil transiting the Strait

The bottleneck also carries significant volumes of liquefied natural gas from Qatar and the United Arab Emirates

Interactive

Exploring all sides of a story is often best achieved with Play.

Ever wondered what historical figures would say about today's headlines?

Debate Arena

Two rounds, two personas, one winner. You set the crossfire.

People Involved

Donald Trump

President of the United States (Directing military operations; defending oil price impact)

Ayatollah Ali Khamenei

Former Supreme Leader of Iran (deceased) (Killed in Israeli airstrike on February 28, 2026)

Mojtaba Khamenei

New Supreme Leader of Iran (Appointed March 8, 2026 by the Assembly of Experts)

Benjamin Netanyahu

Prime Minister of Israel (Leading Israeli military operations against Iran)

Organizations Involved

OPEC+

Intergovernmental oil cartel

Status: Attempting to offset supply disruption with modest production increases

The Organization of the Petroleum Exporting Countries and its allies control roughly 40 percent of global oil production and coordinate supply decisions to influence prices.

Islamic Revolutionary Guard Corps (IRGC)

Military Organization

Status: Directing retaliatory operations and enforcing Hormuz closure

Iran's elite military force, separate from the conventional army, which controls the country's missile program, naval forces in the Persian Gulf, and proxy networks across the Middle East.

Timeline

Oil crosses $100; Mojtaba Khamenei named supreme leader
Market

Brent crude jumped to $101.19 a barrel, crossing the $100 threshold for the first time since July 2022. Dow futures plunged over 900 points. Iran's Assembly of Experts named Mojtaba Khamenei — the slain leader's 56-year-old son — as new supreme leader. Trump called the oil spike 'a very small price to pay.' Reports emerged that the U.S. was considering sending special forces into Iran to seize its stockpile of near-weapons-grade uranium.
Yesterday
Israel strikes Iranian oil infrastructure for the first time
Military

Israeli warplanes hit four oil storage facilities and an oil production transfer center in Tehran and Alborz province, producing thick black smoke over the capital. Iran's IRGC retaliated by striking an oil refinery in Haifa, Israel, with ballistic missiles.
2 days ago
Dow drops 900 points; oil approaches $90
Market

U.S. stocks suffered their worst week in nearly a year as oil prices surged past $90 a barrel and a weak jobs report compounded investor anxiety. The national average gasoline price climbed above $3.30 a gallon.
4 days ago
Strait of Hormuz traffic drops to near zero
Shipping

Tanker traffic through the strait collapsed from roughly 50 daily crossings to near zero. Over 150 ships anchored outside the strait. Iran announced it would allow only Chinese-flagged vessels to pass, citing China's diplomatic stance.
5 days ago
Iran attacks energy infrastructure in Qatar and Saudi Arabia
Military

Iran struck QatarEnergy facilities at Ras Laffan and Mesaieed, halting production at the world's largest liquefied natural gas operation. A fire at Saudi Aramco's Ras Tanura refinery — the kingdom's largest — was caused by debris from intercepted Iranian drones.
7 days ago
Iran retaliates across the region; six U.S. soldiers killed
Military

Iran launched retaliatory missile and drone strikes on U.S. bases, Israel, and Gulf states. Six American soldiers were killed in a single Iranian strike on a base in Kuwait. The IRGC issued warnings prohibiting vessel passage through the Strait of Hormuz.
March 1st, 2026
OPEC+ agrees to modest production increase
Market

OPEC+ approved a 206,000 barrel-per-day increase for April. Saudi Arabia had already quietly added roughly 500,000 barrels per day in anticipation of disruptions. Analysts noted the increase was a fraction of normal Hormuz throughput.
March 1st, 2026
Operation Epic Fury begins; Khamenei killed in opening strikes
Military

The U.S. and Israel launched nearly 900 strikes in 12 hours targeting Iran's nuclear sites, air defenses, military infrastructure, and leadership. Supreme Leader Ali Khamenei was killed in an Israeli airstrike on his Tehran compound, along with dozens of senior officials.
February 28th, 2026 • 02:30 EST
Final Geneva nuclear talks end without a deal
Diplomacy

A third round of indirect negotiations in Geneva collapsed after Iran refused to halt uranium enrichment or transfer its stockpile abroad and demanded sanctions relief. Oil was trading around $69 a barrel (Brent).
February 26th, 2026
Trump issues 10-day ultimatum to Iran
Escalation

President Trump gave Iran a 10-day deadline to reach a nuclear deal or face military strikes, while the U.S. amassed aircraft carriers and warships in the region.
February 20th, 2026
U.S.-Iran indirect talks resume in Muscat
Diplomacy

The United States and Iran held indirect nuclear negotiations in Oman, mediated by Oman's foreign minister. No breakthrough was reached.
February 6th, 2026

Scenarios

War grinds on, oil stays above $100 through spring

Discussed by: J.P. Morgan commodity analysts, International Energy Agency, Goldman Sachs

The most commonly discussed scenario. Neither side shows signs of de-escalation; the Strait of Hormuz remains effectively closed for weeks or months. Oil stays above $100 — potentially climbing to $120 or higher — as spare capacity outside Saudi Arabia is negligible and Gulf infrastructure damage compounds supply losses. U.S. gasoline prices push past $4.00 a gallon nationally. The Federal Reserve faces a stagflation dilemma: an oil-driven inflation spike hitting an economy already weakened by trade disruptions. A recession in oil-importing economies becomes increasingly likely the longer the strait stays shut.

Ceasefire reached within weeks, prices retreat to $80 range

Discussed by: European Union diplomats, China's Ministry of Foreign Affairs, some Wall Street strategists

International pressure — particularly from China, which depends heavily on Gulf oil and has been granted exclusive passage through the strait — brokers a ceasefire. The appointment of Mojtaba Khamenei creates a face-saving off-ramp: a new leader can negotiate terms his father could not. If the strait reopens and Gulf energy infrastructure is repaired, crude could fall back to the $75-85 range within weeks. However, the depth of damage to Iranian, Saudi, Qatari, and Kuwaiti facilities means full supply recovery would take months even in an optimistic scenario.

Conflict escalates into a ground operation, oil tests $150

Discussed by: Axios defense reporters, CSIS analysts, retired U.S. military officials

The reported discussions about deploying U.S. special forces to seize Iran's enriched uranium stockpile indicate the conflict could move beyond air strikes. A ground component — even a limited one — would represent a major escalation, likely triggering fiercer Iranian retaliation against Gulf oil infrastructure and possibly drawing in proxies like Hezbollah. Oil could test $140-150 a barrel, rivaling the inflation-adjusted peaks of the 1970s oil crises. Markets would price in a prolonged, multi-front regional war.

Strategic reserves and alternative routes cushion the blow

Discussed by: U.S. Senate Democrats (led by Chuck Schumer), International Energy Agency, energy analysts

The U.S. releases oil from the Strategic Petroleum Reserve — currently holding roughly 400 million barrels — while Saudi Arabia maximizes pipeline exports that bypass the Strait of Hormuz, including the East-West pipeline to the Red Sea. Other International Energy Agency members coordinate their own reserve releases. This scenario limits the price spike to the $90-110 range but cannot fully replace the lost Hormuz throughput. Trump has so far resisted calls to tap the reserve, and the Red Sea route faces its own security risks.

Historical Context

Arab oil embargo (1973-1974)

October 1973 - March 1974

What Happened

After the United States provided emergency military aid to Israel during the Yom Kippur War, the Organization of Arab Petroleum Exporting Countries imposed an oil embargo on the U.S. and other Western nations. The price of oil quadrupled from $2.90 to $11.65 a barrel in under four months, producing gas lines, rationing, and a sharp recession.

Outcome

Short Term

The U.S. economy entered a deep recession with double-digit inflation and unemployment rising above 8 percent. Congress imposed a national 55-mph speed limit to conserve fuel.

Long Term

The crisis led to the creation of the Strategic Petroleum Reserve in 1975 and the International Energy Agency to coordinate Western responses to supply disruptions. It permanently ended the era of cheap oil and reshaped American energy policy.

Why It's Relevant Today

The 1973 embargo demonstrated what happens when a major oil chokepoint is deliberately closed for geopolitical leverage — the exact mechanism now playing out in the Strait of Hormuz. The difference in scale: the embargo removed roughly 5 million barrels per day from the market. The Hormuz closure threatens roughly 17 million.

Gulf War oil shock (1990)

August 1990 - February 1991

What Happened

Iraq's invasion of Kuwait on August 2, 1990, removed approximately 4.3 million barrels per day from global supply — the combined output of both countries. Oil prices roughly doubled from $34 to about $77 a barrel within weeks as markets feared Saddam Hussein would invade Saudi Arabia and seize a larger share of global production.

Outcome

Short Term

Prices spiked sharply but fell back quickly once the U.S.-led coalition launched Operation Desert Storm in January 1991. Saudi Arabia ramped up production to partially offset the lost Iraqi and Kuwaiti output.

Long Term

The rapid military resolution limited the economic damage. The episode reinforced that oil shocks tied to Middle Eastern conflicts are measured not just by barrels lost but by how quickly supply can be restored.

Why It's Relevant Today

In 1990, Saudi Arabia served as the swing producer that cushioned the shock. In 2026, Saudi facilities themselves are under attack from Iranian drones and missiles — and the kingdom's primary export route through the Strait of Hormuz is the one that's blocked.

Abqaiq-Khurais attacks (2019)

September 2019

What Happened

Drone and cruise missile strikes — attributed to Iran but claimed by Yemen's Houthis — hit Saudi Arabia's Abqaiq oil processing facility and Khurais oil field on September 14, 2019. The attack temporarily knocked out about 5.7 million barrels per day of Saudi production, roughly half the kingdom's output and 5 percent of global supply.

Outcome

Short Term

Oil prices spiked nearly 15 percent in a single day — the largest one-day jump since 1991. But Saudi Aramco restored most production within two weeks, and prices returned to pre-attack levels within a month.

Long Term

The attack exposed the vulnerability of concentrated energy infrastructure to relatively cheap drone and missile strikes. It demonstrated that sophisticated air defenses could be bypassed and that the margin for disruption in global oil markets was thinner than assumed.

Why It's Relevant Today

The 2019 attack showed that Iranian-linked forces could temporarily disrupt Saudi oil production with precision strikes. In 2026, Iran is executing that same playbook at far greater scale — hitting facilities across multiple Gulf states simultaneously, while also closing the strait itself.