Oil Prices Surge as Iran Conflict Halts Tanker Traffic Through Hormuz

By Finance News On Mar 5, 2026

Oil and gas prices extended their sharp climb this week as the escalating conflict between the US, Israel, and Iran disrupts shipping through one of the world’s most critical energy chokepoints.

Crude oil futures surged again on Thursday (March 5), with the US benchmark climbing roughly 3.5 percent to about US$77 per barrel—the highest level in more than a year. Brent crude rose nearly 3 percent to around US$83 per barrel.

The waterway, which separates Iran from the United Arab Emirates (UAE) and Oman, carries roughly one-fifth of the world’s daily oil and liquefied natural gas shipments.

Since the latest wave of hostilities began over the weekend, tanker traffic through the strait has largely stalled, with shipowners reluctant to transit the area amid continued missile attacks and drone strikes.

Energy prices have already surged roughly 15 percent since the conflict intensified. US gasoline prices are beginning to reflect the shock, rising nearly 9 percent in just one week. The average price of a gallon of regular gasoline in the US climbed from US$2.98 before the attacks to about US$3.25, according to AAA.

Financial markets have responded cautiously. Futures for the Dow Jones Industrial Average fell about 0.3 percent ahead of Thursday’s opening bell, while the S&P 500 (INDEXSP:.INX) and Nasdaq Nasdaq Composite (INDEXNASDAQ:.IXIC) futures also edged lower.

If prices remain elevated, analysts warn the surge could complicate the US Federal Reserve’s efforts to tame inflation. Rising energy costs may reduce the likelihood of interest rate cuts this year, keeping borrowing costs higher for longer and potentially slowing economic growth.

“If the strait were to close for an extended period of time, it would be among the greatest supply shocks in history, and the price of oil undoubtedly would escalate well over US$100,” analysts from S&P Ratings said in a FocusEconomics update. “Given the importance of the strait and the substantial US military presence in the region, it’s highly doubtful the strait could be closed for an extended period of time.”

Continued attacks halt gulf trade

Meanwhile, supply disruptions are intensifying across the Middle East. Shipping data shows tanker traffic through the Strait of Hormuz has dropped dramatically, falling from about 40 vessels per day earlier this year to virtually none in recent days.

Hundreds of oil and gas carriers are now anchored outside the waterway waiting for the security situation to stabilize.

Attacks on commercial shipping have added to the uncertainty. A tanker anchored near Kuwait reported a large explosion on its port side earlier this week. The vessel reportedly suffered a cargo tank leak, although the crew was unharmed.

Other incidents have also been reported. At least nine vessels have come under attack since the conflict began, including tankers targeted by drones and explosive boats in Gulf waters.

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