Oil Prices Surge as Strait of Hormuz Closes

Oil prices surged after the Strait of Hormuz was effectively closed on March 12, 2026, amid fighting involving the U.S., Israel, and Iran. The shutdown constricted flows, prompting forecasters to raise oil outlooks and traders to reassess near-term supply risks.

Strait Closure Halts Shipping and Cuts Supply

The Strait of Hormuz, a strategic chokepoint that handled about 138 ships daily before the conflict and accounted for roughly 20% of global oil supply, has been effectively closed to most commercial traffic. The shutdown has left Gulf loadings and long-haul cargos in limbo.

Iranian attacks struck multiple cargo vessels and at least one tanker, while U.S. forces responded by striking 16 Iranian mine-laying boats. Earlier assaults on a pipeline and terminal at Fujairah displaced vessels and added to the disruption. These incidents pushed many tankers and commercial ships out of the corridor.

The conflict escalated politically in the region. Iran’s supreme leader publicly called for the Strait’s closure. Producers including Saudi Arabia, the UAE, Kuwait, and Iraq cut output. Kuwait declared force majeure and reduced shipments. Qatar announced LNG shutdowns or force majeure measures. The UAE’s Ruwais refinery was taken offline after a drone strike and fire.

Global logistics firms altered routes. Maersk, the world’s second-largest shipping company, suspended bookings to and from Gulf states, Iraq, and Jordan, citing profound disruption to shipping operations and complications for energy-intensive sectors.

The hostilities have also caused significant casualties, with reports citing more than 1,300 Iranian fatalities and seven U.S. military deaths, along with roughly 150 U.S. service members wounded.

Price Volatility and Forecast Revisions

Governments moved to add temporary supply to markets. The U.S. released 172 million barrels from its Strategic Petroleum Reserve (SPR) as part of a coordinated global release of roughly 400 million barrels. Despite this, markets remained volatile and the premium tied to broken physical flows persisted.

Over the past 72 hours, crude prices swung sharply, trading near $120 per barrel at times before plunging to about $81. Prices later stabilized within an $88–$112 band as markets chased scarce cargoes and transit assurances. Volatility tracked shifting news about vessel strikes, transit escorts, and port closures.

Goldman Sachs raised its Q4 2026 Brent forecast to $71 per barrel from $66 and its West Texas Intermediate (WTI) forecast to $67 from $62. The firm said a $150 peak was possible if the Strait remained shut through March. Other analysts warned of daily increases of $2–$3 per barrel, rising to $10–$15 if key infrastructure were hit. The U.S. energy secretary said oil was unlikely to reach $200 per barrel.

With shipping lanes blocked and regional producers trimming flows, markets remain dependent on reopening the chokepoint. The coordinated release of stockpiles may ease immediate pressure, but a sustained physical shortfall could trigger significant price spikes and prolonged market disruption.