- Oil prices surged 13%, with Brent crude above $82, highest since January 2025
- Tanker traffic through Strait of Hormuz halted amid escalating Iran-related conflict
- US and Iran engaged in military strikes; Iran's Supreme Leader killed in fighting
Oil prices surged the most in four years after escalating conflict involving Iran disrupted tanker traffic through the Strait of Hormuz, a critical chokepoint for global energy supplies. Brent crude jumped as much as 13% to trade above $82 a barrel — its highest level since January 2025 — while West Texas Intermediate hovered near $72. The sharp move followed an effective halt in tanker flows through the strait, as shipowners and traders imposed a self-directed pause amid widening hostilities.
The Strait of Hormuz, located off Iran's coast, carries roughly a fifth of the world's oil supplies along with significant volumes of liquefied natural gas. Any disruption to movement through the narrow waterway immediately reverberates across global markets.
Escalation Deepens Regional Crisis
Iranian authorities said the strait remained open, but also confirmed attacks on three oil tankers. US President Donald Trump said American forces had sunk nine Iranian naval ships and signaled that military operations would continue until objectives were met.
The conflict marks a sharp escalation. The US and Israel launched missile strikes on targets across Iran, urging citizens to rise against the Islamic regime. Tehran retaliated with strikes against Israel, US bases, and other regional targets including Saudi Arabia, Qatar, the United Arab Emirates, Kuwait and Bahrain. Iran's Supreme Leader, Ayatollah Ali Khamenei, was killed in the fighting.
The developments have plunged the global crude market into fresh uncertainty at a time when supply expectations had pointed toward surplus.
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OPEC+ Moves Ahead
In response to the widening crisis, OPEC+ agreed at a previously scheduled weekend meeting to increase production quotas by 206,000 barrels a day next month. The group — which includes Iran, Saudi Arabia and Russia — had already been expected to proceed with modest supply hikes before hostilities intensified.
However, even additional output may prove difficult to access if tanker traffic through Hormuz remains stalled.
Iran produces roughly 3.3 million barrels per day, accounting for about 3% of global supply. Beyond its production, the country's geographic position along the strait gives it outsized strategic influence over oil flows from the Persian Gulf to major markets including China, India and Japan.
Inflation Risks and Policy Options
A sustained surge in crude prices could add to global inflation pressures, complicating efforts by central banks such as the US Federal Reserve to balance price stability with economic growth.
Higher crude costs typically feed into refined products including retail gasoline, a politically sensitive benchmark in the United States.
One potential response from Washington could be a release of oil from the Strategic Petroleum Reserve, an emergency stockpile stored in underground caverns. As of Feb. 20, the reserve held about 415 million barrels, according to government data.
ALSO READ: Ships Avoid Hormuz As Iran Media Says It's Practically Shut
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