Iran threatens to block oil flows through strategic Strait of Hormuz

Thursday 12 March 2026 - 07:00

By: Dakir Madiha

Iran threatens to block oil flows through strategic Strait of Hormuz

Global oil markets surged into sharp volatility after Iran warned it could halt all oil shipments passing through the Strait of Hormuz, a key maritime corridor that carries about 20 percent of the world’s crude supply.

Crude prices briefly climbed above 100 dollars per barrel this week for the first time since Russia’s invasion of Ukraine in 2022, as tensions between the United States, Israel, and Iran disrupted energy flows through the narrow Gulf passage. Although prices later retreated from their peak levels, the spike has already pushed up airline ticket costs and revived fears of rising inflation.

Brent crude jumped to 119 dollars per barrel on Monday before easing. The surge represented the largest single day increase in dollar terms in the history of oil futures trading, according to CNN. The US benchmark West Texas Intermediate also spiked above 110 dollars late Sunday before pulling back.

Prices cooled to around 90 dollars per barrel by Tuesday after US President Donald Trump suggested the conflict could soon end and reports indicated that G7 countries were considering a coordinated release of strategic petroleum reserves to stabilize supply.

The International Energy Agency is expected to recommend releasing 400 million barrels of crude from emergency reserves, which would mark the largest intervention of its kind in the agency’s history. However, Iran’s Islamic Revolutionary Guard Corps warned that “not a single liter of oil” would pass through the Strait of Hormuz if tensions escalate further.

The disruption has also driven aviation fuel costs sharply higher. The BBC reported that jet fuel prices have risen more than 80 percent, climbing from roughly 85 to 90 dollars per barrel before the conflict to between 150 and 200 dollars per barrel.

United Airlines chief executive Scott Kirby told CNBC that the surge in fuel prices would have a significant effect on the airline’s financial performance and that fare increases would likely follow soon.

Airlines across Asia and Europe have already introduced higher fuel surcharges. Air New Zealand has suspended its financial outlook for 2026, while Qantas Airways, Cathay Pacific, Hong Kong Airlines, and Vietnam Airlines have either raised fares or sought government assistance.

Flight disruptions have also intensified. Aviation analytics firm Cirium reported that more than 43,000 flights to and from the Middle East were canceled between February 28 and March 10 as regional instability affected air traffic.

Economists warn the oil shock could ripple through the broader global economy. Mark Zandi, chief economist at Moody’s, told CNBC that if oil stabilizes around 100 dollars per barrel, gasoline prices in the United States could approach four dollars per gallon within a week, accelerating inflation and eroding consumer purchasing power.

Average gasoline prices in the United States had already risen about 16 percent to 3.45 dollars per gallon by Sunday, according to AAA.

Analysts at Capital Economics estimate that sustained oil prices between 90 and 100 dollars per barrel could push inflation in developed economies about 0.8 percentage points higher than current forecasts. Such pressure could force central banks to raise interest rates and slow economic growth.

Erik Norland, chief economist at CME Group, said the surge compounds existing economic pressures. Governments are already managing large fiscal deficits and inflation above policy targets, and higher energy prices could intensify those challenges.