When Brent crude closed at $73 on Friday, the world‘s oil traders were pricing in tension. By Tuesday morning, they were pricing in war. The barrel briefly hit $85.12 before retreating to close at $81.40 — a 16.6% surge in four trading sessions that dwarfs the 1% spike two days after Russia invaded Ukraine in 2022.
The catalyst is not just the U.S.-Israeli strikes on Iran. It is the choking of the Strait of Hormuz, the narrow passage between Iran and Oman through which roughly 15 million barrels of oil and products flow daily — about 20% of global supply.
A Strait Effectively Shut
On Monday, an Iranian Revolutionary Guard commander declared the strait closed and warned that any vessel attempting to pass would be targeted. By early Tuesday, tanker traffic had dropped to near zero, with over 150 ships anchored outside the waterway. At least five tankers have been damaged and two crew members killed. Major shipping companies including Maersk and Hapag-Lloyd suspended transits, while insurers cancelled war-risk coverage effective March 5.
The disruption extends beyond crude oil. Qatar halted LNG production at its two main facilities after Iranian strikes on Ras Laffan and Mesaieed industrial cities. European natural gas futures jumped 30%, and daily LNG tanker freight rates spiked more than 40%. Some 20% of the world’s liquefied natural gas transits the strait, nearly all from Qatar — a lifeline for Europe, South Korea, and China.
OPEC+ Response Falls Short
OPEC+ approved a 206,000 barrel-per-day output increase for April, above the 137,000 bpd analysts had expected but far below the emergency levels some had called for. The increase ends a three-month production pause but does little to calm markets. Jorge Leon of Rystad Energy captured the dilemma: if oil cannot move through Hormuz, extra barrels do nothing to ease supply.
OPEC+ holds roughly 3.5 million bpd of spare capacity, but it is concentrated in Saudi Arabia and the UAE — countries currently absorbing Iranian missile strikes and struggling to export through normal Gulf channels. Saudi Aramco is studying rerouting shipments to Yanbu, a Red Sea port bypassing the Gulf entirely, but pipeline capacity cannot match the tanker volumes lost.
Consumer Pain Spreading Fast
U.S. gasoline prices rose $0.11 per gallon overnight between Monday and Tuesday. European diesel prices have climbed 27% since winter. Trump moved to contain the damage, announcing the U.S. Development Finance Corporation would offer political risk insurance for Gulf maritime trade and that the Navy would escort tankers if necessary. Markets eased on the announcement but remained elevated.
Analysts See Further Upside
Barclays warned Brent could reach $100. Swiss bank UBP projected $120 if the closure persists. Bernstein raised its 2026 Brent forecast from $65 to $80. The Brookings Institute’s Robin Brooks called the situation “an absolutely gigantic shock propagating across global markets.”
For Latin America’s oil exporters, the price surge is a double-edged windfall — higher revenues but vulnerability to global demand destruction if the crisis deepens. For import-dependent economies across the region, the pain at the pump has only just begun.