Published 16 April 2026
Seven weeks ago, the world’s most important oil chokepoint effectively closed. The consequences are still unfolding — and they extend far beyond the price at the pump.
On 28 February 2026, the United States and Israel launched coordinated airstrikes against Iran under Operation Epic Fury, targeting military installations, nuclear facilities, and the country’s leadership. The operation resulted in the death of Supreme Leader Ali Khamenei and triggered an immediate and ferocious Iranian response: missile and drone strikes on Israeli cities, US military bases across the Gulf, and critical energy infrastructure in Saudi Arabia, Qatar, and the UAE. Within days, Iran’s Islamic Revolutionary Guard Corps declared the Strait of Hormuz closed, attacking merchant vessels, issuing transit warnings, and reportedly laying sea mines. The head of the International Energy Agency has since described the resulting situation as the “greatest global energy security challenge in history.”
He is not exaggerating.
The Strait That Holds the World’s Energy in Its Grip
Before 28 February, approximately 25% of the world’s seaborne oil trade and 20% of global LNG passed through the Strait of Hormuz — a narrow waterway barely 33 kilometres wide at its tightest point, with Iran to the north and Oman to the south. Tanker traffic through the strait dropped to near zero within days of the conflict starting. Major container lines — Maersk, CMA CGM, Hapag-Lloyd — suspended all transits. Major vessel insurers, including Norway’s Gard and Skuld and the UK’s NorthStandard, cancelled war-risk coverage for the waterway entirely. Those insurers that remained in the market raised premiums tenfold.
Over 3,200 vessels were reported stranded west of the strait as of early April. QatarEnergy, the world’s largest LNG producer, declared force majeure on its contracts on 3 March and began shutting down liquefaction facilities at Ras Laffan — removing roughly 20% of global LNG supply from the market at a stroke. The simultaneous resumption of Houthi attacks on commercial shipping in the Red Sea forced additional rerouting around the Cape of Good Hope, adding weeks to transit times and compounding the logistics chaos.
Oil Prices: A Rollercoaster With No End in Sight
The price response was immediate and brutal. Brent crude jumped 8% in the first two trading days following the strikes, rising from $71 to $77. By 8 March it had broken through $100 per barrel for the first time in four years. On 19 March, Dubai crude hit a record $166. Brent peaked above $114 before pulling back on brief hopes of negotiation, only to surge again when talks collapsed.
As of this week, Brent is trading around $94–95, having eased from its highs following the announcement of a two-week ceasefire on 8 April and tentative signals that a second round of US-Iran talks may take place. But the Strait of Hormuz remains effectively closed. A US naval blockade of Iranian ports, announced on 14 April after negotiations in Islamabad failed, has added a further layer of disruption. Ship traffic through the strait remains far below pre-war levels, and Iran has warned it could retaliate against the blockade by suspending all shipping across the Persian Gulf, the Sea of Oman, and the Red Sea.
In the United States, gasoline prices have risen $1.16 per gallon since the war began, with the national average now above $4.12. California has already breached $5. Jet fuel in North America has spiked 95%, forcing airlines to raise baggage fees and surcharges. Shipping services including USPS, Amazon, and FedEx have implemented fuel surcharges across the board.
LNG: Europe and Asia Take the Heaviest Blow
The asymmetry of this crisis is striking. US natural gas prices have risen only modestly — around 7% — because North American supply is largely self-contained, with limited pipeline and export connectivity to global markets. But in Europe and Asia, the picture is dramatically worse. European TTF gas prices have surged roughly 60% since 28 February. Asian LNG spot prices have risen over 140%.
The loss of Qatari LNG is the primary driver. Europe receives 12–14% of its LNG from Qatar; for some Asian buyers the dependence is far higher. Singapore, Taiwan, Bangladesh, and Pakistan are acutely exposed. Israel halted gas production at the Karish and Leviathan fields on the first day of the conflict, cutting off pipeline gas to Egypt and Jordan and forcing Egypt — itself a major fertiliser exporter — onto the increasingly expensive LNG spot market. Shell’s CEO has warned that Europe could face actual fuel shortages by late April. British supermarket chain Asda has already reported supply issues at its forecourts.
Beyond Energy: The Cascading Supply Chain Shock
The most alarming dimension of this crisis is the one receiving the least public attention: the non-oil commodities that also transit the Strait of Hormuz and depend on Gulf feedstocks. This is not simply an energy shock. It is a multi-sector supply chain shock with consequences that will take months, possibly years, to work through.
Fertilisers are the most urgent concern. The Gulf region accounts for roughly 30–35% of global urea exports, 20–30% of ammonia exports, and around 20% of phosphate fertiliser trade. About one-third of all internationally traded fertiliser normally transits the Strait of Hormuz. Urea prices have risen approximately 50% since the war began, with the benchmark price at US ports climbing from $516 to over $680 per metric tonne in a single week. India, which sources 66% of its imported urea and 50% of its LNG (used to power domestic fertiliser plants) from the Gulf, has seen producers including Indian Farmers Fertiliser Co-operative shut down facilities. Bangladesh has done the same. Brazil, which imports over 90% of its urea, is similarly exposed. The Carnegie Endowment has warned bluntly: even if the strait opens tomorrow, restarting fertiliser production and transport will take weeks — weeks that Northern Hemisphere farmers entering planting season do not have.
Sulphur, a by-product of oil and gas refining, is critical to phosphate fertiliser production. Nearly half of all global seaborne sulphur trade passes through the Strait. Gulf refining has been at a standstill, and China has already banned sulphur exports in response to the scarcity, in turn disrupting copper production in Chile, which depends on imported sulphuric acid.
Methanol, a key feedstock for plastics, resins, and coatings, is similarly affected — roughly a third of global seaborne methanol trade transits the Strait. Chinese port inventories are falling toward what analysts describe as “below warning thresholds.”
Helium — one-third of global production comes from Qatar — is now being rationed by distributors worldwide, threatening semiconductor manufacturing, MRI operations, and aerospace applications.
Petrochemicals face a double hit: direct disruption of Middle Eastern exports and the indirect effect of LNG shortages on electricity-intensive downstream processors in South Korea, Taiwan, and Japan. The Atlantic Council has warned that if these countries are forced to ration electricity, they may curtail petrochemical production in favour of higher-priority uses such as air conditioning and semiconductor fabrication — potentially concentrating more of the global petrochemical supply chain in China.
The Geopolitical Dimension: Winners and Losers
The crisis is reshaping geopolitical dynamics in real time. Iran has selectively granted transit rights through the Strait to ships from China, Russia, India, Iraq, Pakistan, Malaysia, Thailand, and the Philippines — creating a two-tier system that strengthens its leverage and rewards its allies while punishing Western-aligned economies. On 27 March, Iran agreed to a UN request to allow humanitarian and fertiliser shipments through the strait, but the practical impact has been limited.
The US suspended sanctions on Russian oil on a temporary emergency basis in early March, granting India a 30-day waiver to buy stranded Russian cargoes. Saudi Arabia is reportedly reconsidering the expansion of its East-West oil pipeline — originally built during the Iran-Iraq War — to bypass the Strait entirely. Gulf states are reviving interest in the IMEC corridor (India-Middle East-Europe), which would route trade through Israel’s port of Haifa.
Russia and China stand to benefit from the disruption. Russia gains a reprieve from Western energy isolation; China’s massive domestic petrochemical and fertiliser capacity insulates it from the worst effects while its competitors in Asia face curtailment. The Atlantic Council has warned that a prolonged crisis could enable Beijing to establish lasting structural advantages in global chemical supply chains.
What Happens Next
As of 16 April, the situation remains deeply uncertain. A ceasefire is nominally in place but the Strait of Hormuz is not open. A US naval blockade of Iranian ports continues. Second-round talks between Washington and Tehran are expected but not confirmed. Iran has rejected the US 15-point peace plan and insists that any ceasefire must include Lebanon. Brent crude is hovering around $95, well above pre-war levels but below the $114–166 peaks seen in March.
The IEA has coordinated strategic petroleum reserve releases, but the incremental 3–4.5 million barrels per day these can provide falls far short of the 16 million barrel per day gap from lost Gulf supply. Non-OPEC producers, including the US, do not have spare capacity to meaningfully offset the shortfall in the short term.
Even an optimistic scenario — a peace deal within weeks, the Strait reopening — would not bring rapid normality. Infrastructure damaged across nine countries will take months to repair. LNG facilities that have been shut down will take weeks to restart. Fertiliser supply chains will lag behind energy recovery. Insurance premiums and war-risk assessments will remain elevated for the foreseeable future. And the psychological impact on global shipping, investment, and commodity procurement will persist long after the last missile is fired.
The 2022 Ukraine crisis showed how quickly an energy shock can cascade into food prices, inflation, and economic slowdown. The Hormuz crisis of 2026 is larger in scale, broader in scope, and more complex in its geopolitical dimensions. It is not just an oil story. It is an everything story — energy, chemicals, fertilisers, food, plastics, semiconductors, and the basic plumbing of global trade. The supply chains that the modern world depends on were designed for an era of open sea lanes and stable chokepoints. That era, for now, is over.