Strait of Hormuz Conflict: Oil Prices Surge as US-Iran Tensions Escalate

The U.S.-Israeli joint attack on Iran on February 28, 2026, has ignited a regional conflict, placing one of the world’s most important waterways – the Strait of Hormuz – at the center of escalating tensions. The passage of oil tankers and other commercial ships has significantly decreased in the strait, raising concerns about potential disruptions to global oil supplies and a surge in energy costs.

What is the Strait of Hormuz?

Located on Iran’s southern border, the Strait of Hormuz connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. It is a strategically vital commercial trade route, ordinarily enabling the flow of approximately 20% of the world’s crude oil – roughly 15 million barrels per day – along with shipments of liquefied natural gas . Experts describe it as a critical “choke-point” for crude oil transportation.

The strait is almost 100 miles long and 21 miles wide at its narrowest point, allowing even the largest vessels to transport oil and gas from the Middle East to destinations in China, Europe, and the U.S. Major crude oil exporters utilizing the strait include Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar, and Iran.

Current Situation in the Strait of Hormuz

The ongoing conflict has brought oil tanker traffic through the strait to a near standstill. This disruption has caused oil prices to surge, with concerns mounting that a prolonged interruption of crude supplies could sharply increase energy costs, including gasoline prices in the U.S. Authorities have reportedly warned ships not to cross the waterway .

Ship trafficking data indicates a 70 percent drop in vessels traversing the strait following the U.S.-Israeli attack on February 28 . Although there is no formal blockade, threats from Iran, coupled with drone and missile attacks, are deterring tankers from using the route.

Impact on Oil and Gas Prices

Escalating regional tensions have led to a significant increase in oil and gas prices. On March 2, Brent crude, the international oil benchmark, spiked by as much as 13 percent before easing slightly. U.S.-traded oil is up more than 6.5 percent, and natural gas soared by 50 percent, largely due to Qatar Energies halting production after its facilities were targeted by Iranian drones .

As of March 9, 2026, the national average gas price in the U.S. Had jumped to $3.45 per gallon, an increase of over 51 cents in the last week and roughly 42 cents from a year ago .

U.S. Response and Potential Solutions

As part of the United States’ Operation Epic Fury, the Donald Trump administration has targeted Iran’s navy, destroying nine of its warships and hindering its ability to fully block the Strait of Hormuz . President Trump has stated the U.S. “could do a lot” about the strait and threatened Iran if it inhibits the waterway .

The U.S. International Development Finance Corporation will provide insurance to all ships passing through the Persian Gulf, and the U.S. Navy is prepared to escort tankers through the Strait of Hormuz if necessary. President Trump has warned that any interference with the flow of oil will be met with a severe response, stating, “If they do anything bad, that would be the end of Iran and you’d never hear the name again” .

Alternative Routes

While alternative routes exist, such as the East-West Pipeline (Petroline) in Saudi Arabia and the Abu Dhabi Crude Oil Pipeline in the United Arab Emirates, their capacity is limited. These pipelines can only accommodate a fraction of the oil volume that typically passes through the Strait of Hormuz daily.

Looking Ahead

The duration of the conflict and how long the Strait of Hormuz remains dangerous to traverse are critical questions moving forward. An extended disruption could preserve oil prices above $100 a barrel, driving up energy costs globally. Analysts emphasize that the impact on energy flows will depend on the length of the closure and any damage to energy infrastructure in the region .