As the IRGC declares the Strait of Hormuz closed, the world is bracing for an economic earthquake that could send petrol prices to record highs.
What is the Strait of Hormuz?
Located between the Persian Gulf and the Gulf of Oman, this narrow waterway is the only sea exit for the world’s most oil-rich region. It serves as the ultimate “energy hallway,” with 20% to 30% of the world’s total oil trade passing through its waters every single day. If the global economy has a heart, this is its main artery.
Why is it Blocked?
Following the U.S.-Israeli “Operation Epic Fury” on February 28, 2026 (which resulted in the assassination of Iran’s Supreme Leader) the region has become a high-risk combat zone. Irans Revolutionary Guard (IRGC) has issued direct marine radio warnings that no commercial ships are permitted to pass. Authorities have confirmed that safe passage can no longer be guaranteed amid the ongoing naval standoff and military operations.
Who is Most Impacted?
The Suppliers: Major oil and gas giants like Saudi Arabia, Iraq, Kuwait, the UAE, and Qatar (the worlds LNG leader) are now physically cut off from their global
customers.
The Importers: Energy-dependent nations like India, Japan, South Korea, and the EU face immediate fuel shortages and massive trade deficits.
The Superpower Risk: As the world’s largest oil importer, China is the most vulnerable; the blockade effectively severs a critical leg of their “Belt and Road” trade route, threatening their entire industrial economy.
The New Price:
Brent crude (the global benchmark) jumped from $72 to over $82 per barrel almost immediately after the New York and London markets opened on Monday.
Natural Gas Explosion:
While oil is up 13%, European natural gas prices have skyrocketed by 38% in a single day after QatarEnergy halted production at two major sites due to drone attacks.
Over 200 massive oil tankers are currently “anchored and waiting” outside the Strait of Hormuz, refusing to enter the Gulf for fear of being struck by missiles or drones.
Journalists at The Guardian and Al Jazeera are warning that this couldn’t happen at a worse time.
Just as global inflation was finally cooling down from the pandemic era, this war has reignited it.
The “Venezuela Wild Card”:
One hope for the West is that the U.S. has recently captured Venezuelan oil fields and is rushing tankers to America to try and keep prices down but experts say it’s “not enough” to replace the 20 million barrels lost from the Gulf every day.