The International Energy Agency has used language that rarely appears in official economic commentary. Its head described the situation created by the Iran war as the “greatest global energy security challenge in history.” That assessment is now being backed by data, by prices, and by shortages spreading from Asia through Europe.
The closure of the Strait of Hormuz — the narrow waterway between Iran and Oman through which roughly a fifth of the world’s daily oil supply normally passes — has now been in effect for over a month. What began as a military confrontation is becoming an economic emergency.
The Scale of the Disruption
The 2026 Iran war, including the closure of the Strait of Hormuz, has led to what analysts describe as possibly the largest ever supply disruption in the global oil market. The impacts include acute supply shortages and rising fuel costs, leading to inflation and heightened risks of stagflation and recession.
Brent crude oil prices surpassed $100 per barrel on March 8 for the first time in four years. Oil prices have surged faster than during any other conflict in recent history. As of Monday, international benchmark Brent crude settled at $109.77 per barrel, while US West Texas Intermediate closed at $112.41 per barrel.
The strait, which borders Iran and Oman, is a key waterway particularly for the transit of oil, natural gas, and other commodities including helium, fertilizers, and industrial products. Roughly 27 percent of the world’s maritime trade in crude oil and petroleum products passes through it.
Nearly one billion barrels of supply is expected to be lost by the end of the month, comprising up to 600 million barrels of crude oil and roughly 350 million barrels of refined products, according to TD Securities. “With the conflict now expected to last at least into deep April, the barrel math becomes increasingly grim,” said Ryan McKay, senior commodity strategist at TD Securities.
What Countries Are Experiencing
While crude oil futures have remained below their peaks, prices for refined fuels like diesel and jet fuel have rocketed — at times topping $200 and producing the first signs of demand destruction in Asian markets that rely heavily on both crude oil and liquefied petroleum gas shipped through the strait.
The impact on individual countries is severe. Pakistan has told cricket fans to watch games from home to preserve fuel. There are shortages in Thailand. Hundreds of gas stations in Australia have reported fuel shortfalls and carriers have canceled flights from Vietnam to New Zealand. South Korea has announced a five-month restriction on the export of naphtha, a fuel that helps make petrochemicals and gasoline.
Myanmar has restricted private vehicle use to alternate days, with long queues forming at petrol stations. The Philippines, which imports 98 percent of its oil from the Middle East, declared a state of national energy emergency on March 24, becoming the first country in the world to do so following the Iran war. President Marcos said the country had enough crude oil supply until June 30.
In India, the gas shortage in Gujarat state has led to its ceramics industry shutting down. In Mumbai, many hotels and restaurants shut down fully or partially in early March due to a lack of cooking gas. Sri Lanka has introduced a four-day working week.
The war has also precipitated a major energy crisis for Europe, primarily through the suspension of Qatari liquefied natural gas. The conflict coincided with historically low European gas storage levels — estimated at just 30 percent capacity following a harsh winter — causing Dutch TTF gas benchmarks to nearly double to over 60 euros per megawatt-hour by mid-March. The European Commission has advised member states to fill gas storage early to avoid further price spikes.
Why It Compares to the 1970s
In conversations with more than three dozen oil and gas traders, executives, brokers, shippers, and advisers over the past week, one message was repeated: the world still has not grasped the severity of the situation. Many drew parallels with the 1970s oil shock, warning a prolonged closure would threaten an even bigger crisis.
The 1973 Arab oil embargo lasted five months and sent oil prices up roughly 300 percent. The 1979 Iranian Revolution triggered a second shock. Both caused recessions in major economies. The current closure has already lasted more than a month, and the military dynamics make a quick resolution far from guaranteed.
Geopolitical strategist Marko Papic of BCA Research estimated that for now, through roughly April 19, the world has lost 4.5 to 5 million barrels per day of oil — about 5 percent of global supply. But that number “will double by mid-April, becoming the largest loss of crude supply” on record.
US government officials and Wall Street analysts have begun discussing the prospect of oil reaching $200 per barrel if the disruption continues.
What Is Being Done
The US and others are releasing 400 million barrels of oil from strategic reserves — the biggest release on record — and the US has temporarily lifted sanctions on some Russian and Iranian oil to give markets breathing room.
OPEC+ agreed to increase production by 206,000 barrels per day in May. However, it remains unclear how that oil will reach global markets with the strait still blocked. Several Gulf producers have been rerouting supply via alternative pipelines. Saudi Arabia has diverted oil through the East–West Pipeline to the Red Sea port of Yanbu. The UAE has used the Abu Dhabi Crude Oil Pipeline to Fujairah on the Arabian Sea. But combined, these alternatives can only carry a fraction of what the strait normally moves.
What Happens Next
Oil executives and analysts have warned that the strait needs to be reopened by mid-April or oil supply disruptions will get significantly worse. Every day Iran is willing and able to threaten shipping puts the world closer to serious economic damage.
The main message from industry participants: “We’re going to get the energy transition forced on us in a very painful way that’s going to happen very quickly.” If the strait remains closed for a second month, global energy markets will quickly evolve into a fight for supplies, driving prices higher and benefiting countries able to outbid others.
For consumers in Asia, Europe, and beyond, the question is no longer whether this crisis will be felt. It is how much worse it gets before it gets better.
