Oil Prices See Biggest Jump in 4 Years

The crisis began on February 28, 2026, after joint U.S.-Israeli military strikes on Iran, which included the assassination of Supreme Leader Ali Khamenei. In retaliation, Iran's Islamic Revolutionary Guard Corps (IRGC) warned all vessels against passage, with a senior adviser later confirming the strait's closure to all traffic. The Strait of Hormuz is the world's most critical energy chokepoint, with about 20% of global oil consumption passing through it daily. It is the only sea route connecting Persian Gulf exporters like Saudi Arabia, the UAE, Kuwait, and Iraq to the open ocean. The waterway is also vital for liquefied natural gas (LNG), accounting for roughly 20% of the global total, with nearly all of top exporter Qatar's supply transiting the strait. Following the closure, QatarEnergy announced a complete halt to its LNG production after two of its facilities were hit. In the immediate aftermath, Brent crude futures surged 13% to $82.37 a barrel, while European natural gas prices jumped 35.5%. Analysts warn that a prolonged shutdown could push oil prices well into the triple digits, potentially reaching $150 a barrel. While Iran has not declared a formal, legal blockade, the strait is considered "de facto closed." Major shipping lines like Maersk and Hapag-Lloyd have suspended transit, and maritime insurers have cancelled coverage for the region, making passage economically impossible for most operators. This marks an unprecedented escalation for the waterway. During the Iran-Iraq "Tanker War" in the 1980s, both sides targeted tankers, but the strait was never fully closed. The global economy has limited options to mitigate the impact. Existing bypass pipelines can only offset less than 20% of the disrupted oil flow. A sustained closure threatens to trigger a global recession, with Asian economies that are heavily reliant on Middle East energy, such as China, Japan, and India, facing the most acute risks.