Oil Spikes 12% Past $75
Oil surged 12% past $75/barrel as US-Israel actions effectively shut the Strait of Hormuz, while gold broke $5,400. Saudi Aramco halted its 550k bpd Ras Tanura refinery after a drone strike, and Qatar's Ras Laffan oil/gas field was hit by drones. US stocks dropped with airline shares slumping on fuel fears while defense stocks rallied.
The Strait of Hormuz is the world's most critical oil chokepoint, with about 20% of the globe's total petroleum liquids consumption passing through it daily. The narrow waterway has limited alternatives for bypassing, making any disruption a significant threat to global energy security. The shut down Ras Tanura refinery is Saudi Arabia's largest and the oldest in the Persian Gulf, possessing a crude distillation capacity of 550,000 barrels per day. A significant portion of its output serves Saudi Arabia's domestic needs, with the remainder destined for export. The last major attack on Saudi energy infrastructure in September 2019 temporarily cut more than half of the kingdom's crude oil production. Qatar's Ras Laffan Industrial City, which was also hit by drones, is the world's largest export facility for liquefied natural gas (LNG), with an annual production of 77 million tonnes. It also features the Pearl Gas-to-Liquids (GTL) plant, a joint venture with Shell, capable of producing 140,000 barrels of synthetic fuels per day. Historically, geopolitical turmoil in the Middle East has led to significant oil price shocks. The 1973 Yom Kippur War caused prices to quadruple from around $3 to nearly $12 per barrel, while the 1979 Iranian Revolution and subsequent Iran-Iraq War saw prices more than double again to over $36 by 1980. For the airline industry, fuel can account for 25-30% of total operating expenses, making sudden price spikes a major challenge to profitability. While some costs can be passed on to consumers, the industry's competitiveness often limits how much of the burden can be shifted. Defense contractors often see a surge in stock value during such geopolitical crises. In early 2026, the iShares U.S. Aerospace & Defense ETF had already climbed 14%. Major firms like Lockheed Martin and Northrop Grumman saw their stock prices rise by 40% and 46% respectively since June of the previous year due to heightened tensions. European defense companies like BAE Systems also experienced significant stock surges.
