Oil Surges 14% as Iran Conflict Roils Markets
Oil prices have spiked more than 14% since the U.S.-Iran conflict began, stoking fears of global energy disruption. While U.S. stocks initially plunged, they've shown surprising resilience, with some indices rebounding as investors weigh the conflict's scope, though gold and defense stocks continue to climb.
The recent escalation follows U.S. and Israeli military strikes in Iran on February 28, 2026, which resulted in the death of Supreme Leader Ayatollah Ali Khamenei. In response, Iran launched missile and drone attacks on Israel and several Gulf nations, dramatically heightening regional instability. At the heart of the market's anxiety is the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's daily oil consumption passes. Following the attacks, Iran declared the strait closed to navigation, bringing a vital artery of global energy supply to a near standstill. The impact on shipping has been immediate and severe. Oil tanker traffic through the strait plummeted by 86% compared to the 2026 daily average, with only three tankers passing on March 1. As a result, more than 700 vessels are currently stalled on either side of the waterway, awaiting safe passage as insurance providers cancel policies. In response to the crisis, OPEC and its allies have agreed to a modest production increase of 206,000 barrels per day for April. However, the group's spare capacity to offset a major disruption is limited and largely held by Saudi Arabia and the UAE, whose primary export routes also depend on the now-closed Strait of Hormuz. This is not the first time a Middle East conflict has roiled energy markets. The 1979 Iranian Revolution and the Iran-Iraq War in the 1980s both triggered significant oil price shocks and supply disruptions, demonstrating the region's long-standing impact on global economic stability. As a potential buffer, the United States holds the Strategic Petroleum Reserve (SPR). The reserve currently contains about 415 million barrels of crude oil. This is considerably below its historical high after the Biden administration sold 180 million barrels in 2022, its largest-ever release.
