Markets Shaken by Iran War, Oil Surges 14%

The conflict's immediate impact is centered on the Strait of Hormuz, a critical chokepoint for global energy. Roughly 20% of the world's daily oil consumption, about 20 million barrels, passes through this narrow waterway. Following the recent escalation, tanker traffic in the strait has plummeted by as much as 86%, with hundreds of vessels now waiting on either side. This disruption chokes a vital artery of global trade. In the first quarter of 2025, nearly 27% of all maritime oil trade transited the strait. Key Asian economies are heavily reliant on this route, with China, India, South Korea, and Japan being the top destinations for crude passing through it. Europe is also highly vulnerable, as over half of its jet fuel imports sail through this strait. Historically, Middle Eastern conflicts have consistently triggered oil price shocks. The 1973 Yom Kippur War, the 1978 Iranian Revolution, and the 1990 Gulf War all led to dramatic price increases. During the Gulf War, for instance, prices leaped from about $15 to over $41 per barrel in a matter of months. Economists are now watching to see if oil prices remain elevated. A sustained period with prices between $90 and $100 per barrel could raise inflation in developed markets by up to 0.8% and slow GDP growth. The Eurozone is considered the most exposed major economy to this shock, threatening to derail its recent recovery from stagnation. To counter the supply disruption, the United States may turn to its Strategic Petroleum Reserve (SPR). As of February 2026, the SPR holds approximately 415 million barrels of crude oil. The U.S. government can authorize releases from these reserves, stored in underground salt caverns in Texas and Louisiana, to help stabilize prices.