Crude oil prices have surged to levels unseen since mid-2022, propelled by the grinding Iran conflict now entering its third week and persistent closure of the Strait of Hormuz.
Brent futures climbed above $106 per barrel late Sunday after Trump administration officials warned of several more weeks of military action. President Donald Trump took to Truth Social on Saturday to urge international partners to collaborate on reopening the vital passage for tankers, declaring that the U.S. would work with regional states “so that everything goes quickly, smoothly, and well.”
The U.S.-Israel campaign, ignited on 28 February, has effectively sealed off the Iranian-controlled chokepoint, disrupting some 20 million barrels of daily global oil shipments—a scale that dwarfs historical disruptions like the 1979 revolution. Brent settled 2.9 per cent higher at $106.12, while U.S. crude advanced 2.6 per cent to $101.53. Bloomberg forecasters caution that $120 thresholds loom if the standoff endures, exacerbated by after-hours volatility that teased those peaks last weekend.
Iran has ratcheted up resistance through mine-laying and vows to strike American-tied energy facilities, with several tankers already damaged since hostilities began. U.S. strikes have battered Kharg Island, the heart of Iran’s exports, though officials say production sites remain operational.
At home, petrol averages have jumped 24 per cent to $3.70 per gallon since the war started, per AAA, undermining Trump’s boasts of sub-$3 prices last December. The administration countered swiftly, approving BP’s Gulf of Mexico project—its first major venture post-Deepwater Horizon—and directing Sable Offshore to restart California rigs.
The IEA’s members greenlit a record 400 million-barrel stockpile release, though supplies from Europe and the Americas won’t flow until late March.
Ripple effects extend far beyond energy. The strait channels key fertilisers and 30 per cent of global LNG, risking food price spikes for perishables like fruit, dairy and fish as shipments detour expensively around Africa.
OPEC+ pledges extra output from May, but analysts like Goldman Sachs project U.S. petrol at $4.50 by April without relief. Markets wavered Monday, airlines slumping on fuel costs while oil firms rose. Faint diplomatic signals via Oman persist amid Tehran’s defiance.