Strait of Hormuz Becomes Focus as Global Economy Faces Enormous Pressure, Surging International Oil Prices Trigger Widespread Concerns

【Global Times Correspondents in France and Russia: Yu Chaofan, Sui Xin, Shen Zhen】 “The global oil market is facing the most severe supply disruptions in history.” The International Energy Agency stated in its latest report on the 12th that conflicts in the Middle East have disrupted shipping through the Strait of Hormuz, leading to a 7.5% decrease in global oil supply compared to February. If shipping cannot be restored quickly, the global crude oil supply gap will widen further. On the same day, Iran’s newly appointed Supreme Leader, Muqtada Khamenei, issued his first statement since taking office, saying Iran will not give up revenge and will continue to block the Strait of Hormuz. U.S. President Trump claimed that preventing the Iranian regime from acquiring nuclear weapons is a higher priority than oil prices. This has led to decreasing expectations that the U.S.-Israel-Iran conflict will quickly subside. Subsequently, London Brent crude futures prices rebounded above $100 per barrel. The Wall Street Journal noted that a new reality in the oil market is that disruptions in Gulf region oil supplies are unlikely to end in the short term. Singapore’s Foreign Minister Vivian on the 13th expressed concern: if the conflict in the Middle East persists, it could impact global security and energy trade. In response, countries are taking measures. The U.S. has had to relax some sanctions on Russia, Japan is preparing to release its oil reserves first, and South Korea announced the full implementation of a cap on oil prices. Whether these measures can ease the current predicament remains to be seen.

On the 13th, at Hana Bank headquarters in Seoul, South Korea, traders are closely monitoring screens showing international oil prices, with real-time updates indicating London Brent crude futures (center) rising above $100 per barrel. (AFP)

The “New Reality” of the Oil Market

According to the latest monthly oil market report released by the International Energy Agency on the 12th, before the U.S. and Israel launched military strikes against Iran on February 28, the daily transportation volume of crude oil and petroleum products through the Strait of Hormuz was about 20 million barrels. Currently, shipping through the strait has decreased by over 90%, reaching “extremely low levels.” Due to limited alternative routes and near-saturation of storage facilities, Gulf countries have cut their daily total crude oil production by at least 10 million barrels. The report estimates that in March, global daily crude oil supply will sharply fall by about 8 million barrels, a 7.5% decrease from February.

Since the U.S.-Israel attack on Iran, international oil prices have fluctuated wildly. Brent crude futures once surged close to $120 per barrel. In this context, on the 11th, member countries of the International Energy Agency unanimously agreed to release 400 million barrels from strategic reserves to ease global supply tensions. The agency admitted in its report on the 12th that, if the conflict cannot be quickly resolved, this is only a “stopgap measure.” “European News Network” reported that the IEA attempted to stabilize the market by coordinating the largest-ever release of strategic reserves, but this effort has largely failed. With shipping through the Strait of Hormuz nearly halted, insurance companies cancel war risk coverage, and shipping companies reroute, the oil market remains highly anxious. Brent crude prices have returned above $100 per barrel, a significant increase from about $60 before the conflict erupted in mid-February.

According to BBC on the 13th, data from the UK Maritime Trade Operations show that since the conflict began, a total of 18 ships have been attacked in or near the Strait of Hormuz. In this situation, calls for U.S. escort protection have increased. U.S. Energy Secretary Jennifer Granholm said on the 12th that the U.S. is “not yet ready” to escort tankers through the Strait of Hormuz, as all U.S. military forces in the region are currently focused on destroying Iran’s offensive capabilities. She indicated that the U.S. Navy “may start escorting tankers by the end of this month.” Trump, in an interview with Fox News on the 12th, urged tankers to “show some courage” to pass through the Strait of Hormuz, claiming, “There’s nothing to fear. They (Iran) don’t have a navy. We’ve sunk all their ships.”

On the 13th, Foreign Policy website reported that large-scale release of oil reserves, promises of escort, and insurance cannot convince the market that this crisis will end soon. Part of the problem is that the reserve releases will be carried out in batches over several months, while the halt in oil production and tanker transportation is happening now. “In other words, the Trump administration has used all policy tools—military, financial, and energy—to contain the consequences of the war it has provoked, but so far, all efforts have been futile.”

The Wall Street Journal noted that the oil market is gradually realizing a new reality: disruptions to the Gulf region’s vast energy supplies are unlikely to end quickly. Analysts believe that if the conflict persists, oil prices could hit multi-year highs. Goldman Sachs predicts that, in more extreme scenarios, Brent crude could average $145 in March and April. The firm currently estimates that the Strait of Hormuz shipping disruption will last 21 days, longer than the previous forecast of 10 days.

South Korea Price Caps, U.S. Eases Russia Sanctions

On the 13th, South Korea implemented a price cap system on oil, setting a ceiling on the supply prices of refined petroleum products, marking the first such measure in nearly 30 years. President Yoon Suk-yeol stated that, in response to domestic oil price fluctuations caused by international turmoil, the government has decided to set clear limits on supply prices. To prevent some traders from profiteering amid chaos, public supervision and participation are encouraged.

According to Kyodo News, Japan announced on the 13th that it will release its oil reserves starting from the 16th of this month, with a total volume equivalent to 45 days of consumption—its largest release in history, 1.8 times the amount after the 2011 earthquake. The reserves will be sold to refiners at prices lower than those before the U.S.-Israel attack on Iran.

Foreign Policy noted that for Asian countries heavily dependent on Middle Eastern oil imports and with limited reserves, the situation is especially severe. Bangladesh is deploying troops to quell fuel shortages and is seeking exemptions to import Russian oil. Countries like Pakistan have shut schools and government agencies due to fuel crises.

On the 13th, the Australian government announced it would release up to 762 million liters of gasoline and diesel from domestic reserves due to soaring demand and fuel shortages in many regions. AFP reported that panic buying has caused fuel prices in Australia to soar. In New South Wales, the most populous state, police warned rural residents about increased fuel theft, investigating the disappearance of 800 liters of diesel from farms in the western part of the state.

In this context, the U.S. Department of the Treasury issued a 30-day license on the 12th allowing countries to purchase Russian oil and petroleum products loaded before March 12. Treasury Secretary Janet Yellen said that this temporary license aims to expand global coverage of existing supplies, allowing countries to buy Russian oil currently stranded at sea. She stated, “This is a targeted, short-term measure only for in-transit oil and will not generate significant revenue for the Russian government.”

According to TASS on the 13th, Russian Presidential Special Envoy Dmitryyev said that with rising oil prices, the largest energy crisis in history is imminent. He stated that the U.S. measures not only relax restrictions on India’s purchase of Russian oil but effectively cancel all restrictions on about 100 million barrels of Russian oil in transit. U.S. authorities have essentially acknowledged that the global market cannot remain stable without Russian energy.

The New York Times reported that despite the U.S. decision to lift some sanctions on Russia, oil prices continue to rise. On the 13th, global oil prices hovered around $100 per barrel. AAA data showed that on the 13th, the average gasoline price rose to $3.63 per gallon. Since the conflict began, U.S. drivers’ fueling costs have increased by 22%. Diesel prices rose even faster, reaching $4.89 per gallon on the 13th, a 30% increase from before the conflict.

An EU Commission spokesperson said on the 12th that, based on assessments from the EU Oil and Gas Coordination Group, there are currently no direct oil supply security issues in the EU. However, if supply disruptions last too long, the situation could change.

“Will it reach $200 per barrel?”

How high could international oil prices go? The Wall Street Journal on the 13th cited Macquarie Group’s forecast that if the Strait of Hormuz is closed for several weeks, oil prices could break through $150 per barrel. Wood Mackenzie’s chief analyst Simon Frazer said, “We believe that $200 per barrel in 2026 is not out of the realm of possibility.” Analysts at ING believe that the only way for prices to stay low is to ensure the safe passage of the Strait of Hormuz. If that cannot be achieved, market highs are still ahead.

“Will oil reach $200 a barrel?” European News Network on the 12th posed this question, noting that since the U.S.-Israel attacks on Iran, the global energy landscape has faced its most turbulent period in decades. What started as targeted military actions quickly escalated into a direct confrontation with significant global economic impacts. Iranian military officials have threatened that oil prices could soar to $200 per barrel. How realistic is this scenario?

The article states that, although $200 per barrel sounds astronomical, adjusted for inflation, oil prices have approached similar levels in the past. In 2008, the nominal price peaked at about $147 per barrel; adjusted for 2026 inflation, that peak would be roughly $211. Major shocks in history, such as the 1973-74 Middle East oil crisis and the 1979 Iranian Revolution, caused oil prices to spike. The current crisis involves a blockade of the Strait of Hormuz, increasing the risk of “price surges.” A recent report by the Oxford Economics Research Institute indicates that an oil price of $140 per barrel is the threshold for a mild global recession, which could reduce global GDP by 0.7% by the end of the year and cause economic contraction in the UK, Eurozone, and Japan.