Strait of Hormuz Crisis Escalates: Oil Prices Surge Amidst Iran Conflict

The Strait of Hormuz, a critical choke point for global energy supplies, is at the center of escalating tensions following joint military strikes by the United States and Israel on Iran on February 28, 2026, which resulted in the death of Iran’s supreme leader, Ali Khamenei [1]. Iran’s response, including retaliatory missile and drone attacks, has led to disruptions in shipping and a significant surge in oil prices.

Iran Restricts Passage Through the Strait

Tehran has declared the Strait of Hormuz closed to vessels belonging to the United States and its allies. While some exceptions have been made, the restrictions have severely impacted global shipping lanes. On March 2, a senior advisor to the commander-in-chief of Iran’s Islamic Revolutionary Guard Corps (IRGC) announced the closure, threatening to “set those ships ablaze” attempting to cross [2].

Oil Prices Soar

The disruptions have caused a dramatic increase in oil prices. Brent crude, the international benchmark, reached $105.70 per barrel on March 16, 2026, a more than 40 percent increase since the start of the conflict [2]. Prices peaked above $119 a barrel following the initial attacks on February 28th.

Attacks on Energy Infrastructure

A series of attacks targeting energy infrastructure in the Middle East have further exacerbated the crisis. These include:

• United Arab Emirates: Operations at the Shah gas field were halted on March 16 following a drone strike [2]. The Ruwai oil refinery was also targeted in a drone attack on March 10, leading to its temporary closure.
• Iraq: An Iraqi oil field was attacked by Iranian drones and missiles.
• Oman: A fuel tank in the port of Duqm was hit by a drone on March 3.
• Qatar: Qatar Energy suspended production of liquefied natural gas (LNG) at the Ras Laffan plant following a drone attack in early March.
• Iran: Israeli government sources reported attacks on oil infrastructure within Iran on March 7.
• Strait of Hormuz & Persian Gulf: Three vessels – a cargo ship, a container ship, and a bulk carrier – were hit by projectiles on March 11 [3].
• Kharg Island: U.S. Forces bombed military targets on the Iranian island of Kharg on March 14, a key location for Iran’s oil exports [3].

International Response and Negotiations

Former U.S. President Trump has called on allies to deploy warships to secure the Strait of Hormuz, but has received a muted response so far [4]. Iran has indicated it is considering requests for safe passage from some countries, with decisions being made by its military [2].

Pakistan and India have reported that some of their vessels have been granted passage through the strait, though details remain limited [2].

Traffic Significantly Reduced

United Nations data reveals a 97 percent decrease in traffic through the Strait of Hormuz since the conflict began on February 28 [3].

The Strategic Importance of the Strait

The Strait of Hormuz is a vital maritime route, handling approximately one-fifth of the world’s oil and liquefied natural gas supplies. Iran’s ability to disrupt traffic through the strait poses a significant threat to the global economy [1].