• Middle East oil exports have dropped at least 60% in the week to March 15 compared to February averages, with the Strait of Hormuz remaining largely closed following US-Israeli military strikes on Iran that began on February 28.
  • Brent crude prices have surged dramatically, briefly exceeding $82 per barrel on March 2 and reportedly reaching around $140 per barrel by mid-March, as the market prices in a significant geopolitical risk premium.
  • The conflict has created severe disruption to global energy flows, with approximately 150 vessels anchored in the waterway and Asian importers facing the greatest exposure to supply shortages.

A Severe Supply Shock Unfolds

Middle East oil exports have plummeted by at least 60% in the week ending March 15 compared to February averages, primarily due to the Strait of Hormuz remaining largely closed following escalated US-Israeli military strikes on Iran that began on February 28. The conflict has created severe disruption to global energy flows, with the strait—through which approximately 20% of global oil transits—effectively closed to most commercial traffic. As of mid-March, around 150 vessels remain anchored in the waterway, unable to proceed, according to shipping data reviewed by analysts.

Oil prices have surged dramatically in response to the supply disruption. Brent crude rose as much as 13% on March 2, briefly exceeding $82 per barrel, with some reports indicating prices have reached approximately $140 per barrel as of mid-March. The market is pricing in a significant geopolitical risk premium due to uncertainty over the conflict's duration and potential escalation to energy infrastructure. "We're seeing a classic supply shock play out in real-time," said one energy trader, who requested anonymity due to the sensitivity of the situation. "Until there's clarity on when the strait reopens, volatility will remain extreme."

Geopolitical Tensions and Market Fallout

The conflict escalated after the US and Israel conducted major military operations against Iran on February 28, 2026. Iran retaliated with missile strikes on Israel and countries hosting US military bases, including Saudi Arabia, the UAE, Qatar, Bahrain, Jordan, and Kuwait. Infrastructure remains a critical concern. While Iran claims military installations were the exclusive targets, reports of strikes near major Saudi facilities have revived concerns about damage on a scale comparable to the 2019 Abqaiq attack. Damage to Saudi export and refining assets or Iran's concentrated export facilities at Kharg Island would further tighten global oil balances.

Asian importers face the greatest exposure to Gulf supply disruptions, particularly those with limited strategic reserves and high reliance on Hormuz transit. The price surge is rippling through global trade, affecting not only oil but also natural gas (LNG) shipments, as roughly 20% of global LNG also transits the strait. Efforts to reach officials in key Asian importing nations for comment were unsuccessful by press time.

Navigating a Volatile Landscape

As of mid-March, the conflict has entered its third week with no clear resolution. President Trump is seeking international help to secure the Strait of Hormuz, attempting to build a coalition of allies to escort ships through the waterway, but this initiative has received "little enthusiasm" from other nations, including China, according to people familiar with the diplomatic discussions. Some limited vessel traffic has resumed—approximately 20 vessels have crossed the strait, mostly of Iranian origin, with at least one non-Iranian cargo ship having crossed.

In the short term, oil markets remain volatile and on edge. The continuation of the strait's closure will maintain constriction on physical oil supplies. Global oil balances currently show only a modest surplus, supported by rising Americas production, but this buffer depends on the conflict remaining contained and physical supply remaining uninterrupted. If infrastructure remains intact and the conflict de-escalates, volatility may ease. However, if escalation deepens—particularly toward major energy infrastructure—oil prices could reprice structurally higher as supply risk becomes embedded in the market. The US Strategic Petroleum Reserve is not expected to be released unless infrastructure damage materially tightens global supply, analysts note.

Correction: An earlier version of this article misstated the percentage increase in Brent crude prices on March 2; it has been corrected to 13%.