Iran War Disrupts Oil Supply, Sending Prices Soaring

The ongoing conflict involving Iran is significantly impacting global oil markets, leading to price increases and concerns about potential shortages. Disruptions to shipping through the Strait of Hormuz, a critical waterway for oil transport, are at the heart of the issue.

Strait of Hormuz: A Key Chokepoint

The Strait of Hormuz, located between Iran and the Arabian Peninsula, is a narrow but vital passage through which approximately one-fifth of the world’s oil supply passes daily. Recent hostilities have threatened maritime traffic, with Iran threatening to target ships that travel without its permission.

Shipping Disruptions and Tanker Congestion

Daily transits through the Strait of Hormuz have decreased by as much as 90-95% since the conflict began in March 2026, according to shipping intelligence firm Kpler. Hundreds of tankers are currently stranded in the Persian Gulf, creating severe congestion. As of April 2, 2026, the Joint Maritime Information Center (JMIC) reported 12 vessels openly transited the Strait of Hormuz. Prior to the conflict, approximately 138 vessels transited the strait daily.

Rising Oil Prices and Insurance Costs

The reduction in oil supply has caused a significant surge in prices. As of April 3, 2026, the international Brent crude oil benchmark was trading at almost $113 per barrel, an increase of over 50% from pre-war levels. Gas prices in the U.S. Have also spiked, and some Asian countries heavily reliant on Middle Eastern oil are facing potential shortages. The cost of marine insurance for tankers traveling through the Strait of Hormuz has also skyrocketed in recent weeks.

Iran Continues Oil Exports

Despite the conflict, Iran continues to export oil through the Strait of Hormuz, generating revenue to support its economy and military operations. Estimates suggest Iran has exported around 12-13.7 million barrels of oil since the conflict began on February 28, 2026, equating to approximately 1 million barrels per day. This is slightly lower than its average exports of 1.69 million barrels per day in 2025.

Operation Epic Fury and IRGC Funding

The conflict, known as Operation Epic Fury, has highlighted the role of illicit Iranian oil sales in funding the Islamic Revolutionary Guard Corps (IRGC). The IRGC is accused of conducting military and terrorist operations targeting the U.S., Israel, Arab states in the Persian Gulf, and international shipping.

Looking Ahead

The situation remains volatile, and the timeline for resolving the logjam in the Strait of Hormuz is uncertain. A return to normal conditions depends on a significant de-escalation of the conflict. Until then, the global oil market will likely remain vulnerable to further disruptions and price fluctuations.