Global oil prices have surged past the $100 per barrel mark following escalating tensions between the United States, Israel and Iran, with the closure of the strategic Strait of Hormuz triggering widespread disruptions in energy markets and global trade.
As of March 9, Brent crude was trading at about $106 per barrel, while West Texas Intermediate (WTI) climbed to roughly $107, reflecting growing fears over supply disruptions after maritime traffic through the Strait of Hormuz sharply declined.
The waterway, located between Iran and Oman, is one of the world’s most critical energy chokepoints, handling nearly 20 percent of global oil shipments. Its closure has significantly disrupted shipping and production across the Middle East, sending shockwaves through international markets.
Iran’s Islamic Revolutionary Guard Corps (IRGC) confirmed the closure of the strait on March 2 following US-Israeli strikes on Iranian targets, causing maritime traffic in the area to fall by between 70 and 80 percent. Several shipping insurers have also suspended coverage for vessels operating in the region.
The disruptions have already affected production in major oil-producing countries. Iraq has reportedly cut output by about 1.5 million barrels per day nearly half its production due to storage constraints and halted exports. QatarEnergy has also temporarily stopped liquefied natural gas (LNG) shipments amid growing security concerns.
The crisis has rattled financial markets across Asia, where economies are heavily dependent on Middle Eastern energy supplies.
Stock markets across the region opened sharply lower on Monday, extending last week’s losses as investors reacted to soaring energy prices and fears of prolonged geopolitical instability.
South Korea’s Kospi index plunged more than eight percent earlier in the week, triggering trading halts, while Japan’s Nikkei index dropped about seven percent amid heavy sell-offs in semiconductor and manufacturing stocks.
Other major markets in Hong Kong, Shanghai and Sydney also recorded declines of between three and five percent as investors moved away from riskier assets.
Oil-import-dependent economies such as Japan, South Korea, India and Thailand have been among the hardest hit, with rising energy costs threatening manufacturing output and economic growth.
The shock has also spread to the United States, where futures for the Dow Jones Industrial Average, S&P 500 and Nasdaq fell by more than two percent, signaling mounting concerns about global economic contagion.
Analysts warn that a prolonged disruption of the Strait of Hormuz could trigger stagflation—an economic scenario characterized by high inflation and slow growth. Investment bank Goldman Sachs estimates that a full closure of the strait could add a $14 per barrel risk premium to oil prices.
Asia, which relies on the Middle East for nearly 60 percent of its oil imports, faces the prospect of rising inflation and delayed interest rate cuts as energy costs climb.
In the United States, gasoline prices have already risen to around $3.11 per gallon, with analysts warning that oil prices could remain above $100 per barrel if the conflict persists.
US President Donald Trump has indicated that military operations could continue for several weeks, further clouding the global economic outlook and complicating monetary policy decisions by the Federal Reserve.
