• The Strait of Hormuz, a critical chokepoint for 20% of global oil and significant LNG shipments, has seen near-total halts in tanker traffic due to escalating Iran conflict, surging Brent crude prices by 7% to $83 per barrel as of March 3, 2026.
  • Dollar demand is strengthening as oil priced in USD becomes more expensive, weakening emerging market currencies and increasing borrowing costs amid heightened market volatility.
  • Shipping disruptions, including attacks on vessels like the Palau-flagged tanker Skylight and rerouting by firms such as Maersk (MAERSK-B.CO), are inflating global energy prices and threatening supply chains, with experts warning of prolonged economic impacts.

Escalating Conflict Disrupts Key Shipping Lane

Global shipping has nearly stopped through the Strait of Hormuz, a vital artery for 20 million barrels of oil per day and significant LNG shipments, following US-Israeli strikes on Iran that killed Supreme Leader Ali Khamenei over the weekend of Feb 28. In retaliation, Iranian forces have targeted tankers, including the Skylight on March 1, which left four injured and prompted evacuations, alongside attacks on UAE's Fujairah terminal, Saudi Arabia's Ras Tanura refinery, and Qatar's LNG facilities. According to people familiar with the matter, dozens of tankers carrying millions of barrels are now stuck in Gulf ports, with AIS signals jammed, increasing navigation risks and forcing major firms like Maersk to suspend crossings and impose emergency freight surcharges.

Economic Ripple Effects and Dollar Strength

The disruptions are driving up global oil and LNG prices, pressuring supply chains and consumer costs while strengthening the USD as the petrodollar currency. Iraq's Basra exports, OPEC's second-largest, face total blockage without Hormuz access, and QatarEnergy has halted LNG production at Ras Laffan and Mesaieed, viewing the attacks as existential threats. Efforts to mitigate shortages include Saudi preemptive stockpiling in locations like the Red Sea and Netherlands, but these offer only short-term buffers. Shipping delays and surcharges are hitting trade hard, with emerging markets suffering currency weakness from higher USD borrowing for oil, according to analysts tracking real-time market data.

Industry Responses and Future Outlook

In response to the crisis, companies are scrambling to adapt; Maersk has paused operations and rerouted vessels, while Kpler data shows 10 million barrels stuck on just five tankers. Noam Raydan, an expert cited in industry reports, warns of severe supply chain risks if disruptions persist, though Gulf reserves may provide some relief. The US Navy has issued warnings against transit, and Iran is using the waterway as a bargaining tool in conflicts, echoing past threats from 2019 tanker attacks amid US sanctions. Analysts predict sustained upward pressure on energy prices as the conflict widens, with prolonged disruptions risking oil spills, further refinery hits, and LNG shortages that could spike prices further. Attempts to reach out to Monex USA for comment on the dollar's role were unsuccessful, but sources indicate markets are bracing for a protracted situation.

Correction: An earlier version misstated the date of the Skylight attack; it occurred on March 1, not March 2.