Saudi Arabia Raises Oil Prices as Strait of Hormuz Crisis Deepens

With Iran effectively controlling the Strait of Hormuz amid escalating conflict with the United States and Israel, Saudi Arabia has significantly increased the price of crude oil it sells to Asian markets. The move reflects growing concerns about supply disruptions and the potential for further instability in global energy markets.

Saudi Aramco Increases Crude Oil Prices

According to Bloomberg News and Market Watch, Saudi state-owned oil company Aramco decided to increase the price of its ‘Arab Light’ oil for April shipment to Asia by $2.50 per barrel on March 5th. This marks the largest increase since August 2022. Aramco also raised the sales price of other oil types destined for Asia by $2.00 per barrel, and increased prices for customers in the United States, Northern and Western Europe, and the Mediterranean region as well.

Iran’s Control of the Strait of Hormuz

The price hike is directly linked to the disruption of oil shipments through the Strait of Hormuz. Iran claims to have taken “complete control” of the waterway following US missile strikes against Iranian ships, effectively closing the route. As of Sunday, March 3rd, maritime traffic had decreased by 80%, according to Lloyd’s List Intelligence. The Islamic Revolutionary Guard Corps (IRGC) has threatened to set fire to any ships attempting to transit the strait.

Global Oil Prices Surge

The escalating tensions have already caused a significant surge in global oil prices. On March 5th, U.S. West Texas Intermediate (WTI) crude oil rose 8.51% to exceed $81 per barrel, reaching its highest level in one year and eight months since July 2024. Brent crude oil futures for May delivery closed at $85.41 per barrel, up 4.93%, with a weekly increase of 18%, the largest since 2022.

Saudi Arabia Seeks Alternative Export Routes

With the Strait of Hormuz largely impassable, Saudi Arabia is attempting to reroute crude oil exports through the Red Sea port city of Yanbu as an alternative. This shift is expected to add to costs and logistical challenges, factors that are now reflected in the increased oil prices. Aramco began seeking to reroute crude away from the Strait of Hormuz earlier in March 2026, according to sources.

Strategic Importance of the Strait of Hormuz

The Strait of Hormuz is the primary export route for oil produced by Saudi Arabia, the UAE, Kuwait, Qatar, Iraq, Bahrain and Iran. It is roughly 100 miles long and only 21 miles wide at its narrowest point, lying in Iran’s territorial waters but considered an international waterway. Approximately 20% of the world’s oil passes through the strait, representing roughly 20 million barrels per day.

US Response

US President Donald Trump has stated that US Navy forces will be deployed to escort oil tankers “if necessary.” Experts warn that prolonged disruption could send oil prices well into triple digits and cause major disruption to global supply chains.

Sources: Reuters, The Independent, Wikipedia, IEA