Iran Conflict Disrupts Oil Supply
The Strait of Hormuz blockade by Iran sent crude oil above $100/barrel, pushing U.S. gas prices up $0.50 in a week.
The blockade traps about one-fifth of the world's oil supply, leading to rising energy prices and freight costs. Experts project crude oil prices could surpass $100 per barrel if the blockade persists. The closure forces a global logistics shift towards the Cape of Good Hope, adding roughly 15 days to transit times between Asia and Europe. War-risk insurance premiums for commercial tankers have also spiked. Some countries are expanding sourcing to West Africa, the U.S., and Latin America. India, for example, has increased the share of its crude imports arriving via non-Hormuz routes to nearly 70%. European leaders are discussing a joint naval mission to protect shipping. The US Navy may also escort oil tankers through the Strait. The UN warns that prolonged closure could trigger higher food prices and cost-of-living increases, especially in developing nations. They face high debt and rely on imported energy, fertilizers, and food.
