Oil Surges Past $100 as Iran War Disrupts Supply Amid Strait Crisis

Global oil benchmarks surged past the $100-per-barrel mark on Monday, marking a milestone not seen in nearly four years as geopolitical strife intensifies. The ongoing conflict with Iran has disrupted critical shipping lanes and trimmed output, driving prices to historic daily gains.

Record-Breaking Price Moves

US crude futures climbed $8 to settle at $99 a barrel, while Brent rose $9 to $101—both nearing their largest single-day dollar increases on record. The previous one-day peak of $10.75 was set on June 6, 2008. Early in the session, prices flirted with $120 before reports of Western officials planning measures to ease fuel costs eased some market tension.

Key Factors Behind the Rally

The war with Iran has essentially shut down the Strait of Hormuz, the narrow waterway that handles about 20% of the world’s oil shipments. Tehran’s threats against tankers have brought pickups and deliveries in the region to a standstill, disrupting roughly 20% of global supply—double the impact recorded during the 1956–57 Suez Crisis, according to data from Rapidan Energy Group.

At the same time, Saudi Arabia and the United Arab Emirates have been cut off from major markets, erasing spare production capacity that normally cushions price shocks. “The result is a market with no meaningful cushion. There is no swing producer to step in,” wrote Bob McNally, Rapidan’s founder and president, in a note to clients.

With oil unable to move, producers in the region are running out of storage and have no choice but to curtail output. That contraction in supply has driven global gasoline prices higher as well, with US pump prices jumping about 50 cents in a week to $3.48 a gallon—the highest in Donald Trump's presidency.

Policy Moves and Market Outlook

Many analysts warn that without restored traffic through the Strait of Hormuz, prices could climb even higher. “I would say that the move is a bit overdone in the very short term, but if between now and the end of March you don’t have an amelioration of traffic around the strait, we could go to $150 a barrel,” said Homayoun Falakshahi, lead crude research analyst at Kpler.

Governments are weighing strategies to cool the surge: G7 finance ministers plan to discuss a coordinated release of oil reserves, and the Trump administration has promoted an insurance scheme for tankers in the region after maritime underwriters pulled coverage. The White House also said it would work to secure naval escorts for ships, though no concrete plan has emerged and shipping firms remain wary of the route.

“The higher the price goes, the more pressure on the Trump administration to do something to protect the strait,” said Pickering. “The longer it takes to re-open, the more upward pressure on price. A reinforcing cycle.”