Strait of Hormuz Closure Sends Oil Prices Soaring, Global Economy Braces for Impact
DUBAI, United Arab Emirates (AP) — Hundreds of oil tankers are idled on both sides of the Strait of Hormuz, a critical waterway for global energy supplies, as tensions escalate following recent military actions involving the United States, Israel, and Iran. The disruption has sent oil prices surging above $100 a barrel – a level not seen since the start of the Russia-Ukraine war in 2022 – raising fears of a significant blow to the global economy.
The crisis began on February 28th, when the U.S. and Israel launched strikes on Iranian targets, including the killing of Iran’s supreme leader Ali Khamenei. Iran responded with missile and drone attacks on U.S. military bases and Israeli interests, effectively curtailing maritime traffic through the Strait, which handles approximately one-fifth of the world’s oil supply.
Asian nations like India, China, and Japan, alongside several European countries, heavily rely on Gulf oil. A prolonged disruption threatens to rattle energy markets and exacerbate existing inflationary pressures.
“This feels like a small bandage on a large wound,” said energy strategist Naif Aldandeni, reflecting the limited effectiveness of current efforts to stabilize prices.
The International Energy Agency (IEA) has attempted to mitigate the impact by releasing 400 million barrels of oil from emergency reserves – the largest coordinated drawdown in its history. However, the move has so far failed to significantly curb rising prices. The IEA previously released 182 million barrels following Russia’s invasion of Ukraine, but the current situation presents a different set of challenges.
According to the IEA, oil shipments through the Strait have plummeted to less than 10% of pre-war levels. While IEA members collectively hold approximately 1.25 billion barrels in government-controlled reserves, plus another 600 million in industry stocks, the sheer scale of global demand – averaging 105.17 million barrels per day in 2026 – means the released oil would only cover roughly four days of worldwide consumption. Even compared to typical Strait of Hormuz traffic (around 20 million barrels per day), the reserves represent only about 20 days of normal flow.
Experts emphasize that emergency reserves can temporarily calm market panic but cannot replace the functionality of a disrupted shipping lane. Oil expert Nabil al-Marsoumi noted the price surge includes a “geopolitical risk premium” of roughly $40 per barrel, above what market fundamentals would normally dictate. The reserve release, therefore, primarily aims to dampen this premium rather than fundamentally rebalance the market.
The situation is further complicated by escalating rhetoric and military actions. U.S. President Donald Trump announced Friday that U.S. Central Command (CENTCOM) had struck “more than 90 Iranian military targets” on Kharg Island, a critical Iranian crude export terminal, while intentionally preserving the oil infrastructure. However, Iranian officials have warned they would target energy facilities linked to the U.S. if Iranian oil infrastructure is directly attacked.
Adding to the disruption, major oil companies including QatarEnergy, Kuwait Petroleum Corporation, and Bahrain’s Bapco have declared force majeure and halted production. Saudi Aramco and the UAE’s ADNOC have also shut down their refineries.
Logistical challenges further limit the effectiveness of the IEA’s response. The U.S. Strategic Petroleum Reserve, holding 415.4 million barrels as of February 18, 2026, has a maximum drawdown capacity of 4.4 million barrels per day, but it takes approximately 13 days for released oil to reach U.S. markets.
Analysts warn that prolonged disruption in the Strait of Hormuz, or the expansion of threats to other key chokepoints like the Bab al-Mandeb Strait, could drive prices even higher. The current crisis underscores the vulnerability of the global energy system and the potential for geopolitical events to rapidly destabilize markets.
