Oil Surges Over 14% on Iran War
Global markets are gyrating as the U.S.-Iran war intensifies, with U.S. crude oil prices surging more than 14% since the first strikes. While stocks have seen a volatile but partial recovery, analysts note this is based on fading hopes for a short war and potential OPEC+ intervention.
The conflict directly threatens the Strait of Hormuz, a critical chokepoint for about 20% of the world's daily oil supply. While not physically blockaded, a withdrawal by major shipping operators and insurers has created a "de facto closure," bringing tanker traffic to a virtual standstill. This isn't just a risk premium event; physical barrels of crude, refined products, and Liquefied Natural Gas (LNG) are being impacted simultaneously. Iran has attacked several tankers, and retaliatory strikes have hit energy facilities in Saudi Arabia and Qatar, forcing a halt to some production. In response, a core group of eight OPEC+ members, including Saudi Arabia and Russia, agreed to increase their collective production ceiling by a modest 206,000 barrels per day for April. This increase is a small fraction of the group's estimated spare production capacity of around 3.5 to 4.5 million barrels per day, which is mostly held by Saudi Arabia and the UAE. Analysts are drawing parallels to the 1973 oil crisis, when an embargo by Arab oil producers caused prices to jump nearly 300%. The current disruption to the Strait of Hormuz also affects about a fifth of global LNG trade and a third of the world's trade in urea, a key fertilizer. The United States Strategic Petroleum Reserve (SPR), the world's largest emergency supply, contained roughly 415 million barrels as of late February 2026. The Biden administration conducted the largest-ever release from the reserve in 2022, selling 180 million barrels to combat high gasoline prices, which lowered the SPR to its lowest levels in 40 years. Beyond crude oil, the conflict is causing price shocks across other energy sectors. European natural gas prices have surged, and the disruption of jet fuel supplies from the Middle East, particularly Kuwait, threatens to tighten the European aviation market significantly.
