Oil Surges as Strait of Hormuz Disruptions Rattle Energy Markets

Oil prices surged by as much as 13 percent on March 2 after retaliatory Iranian attacks disrupted shipping in the Strait of Hormuz, following Israeli and US strikes on Iranian military sites.

Brent crude futures climbed to an intraday high of $82.37 a barrel, the strongest level since January 2025, before easing to trade at $78.60 by 9:42 a.m. GMT, up $5.73 or 7.86 percent. US West Texas Intermediate crude rose to $75.33 during the session, its highest point since June, and later stood at $71.84, up $4.82 or 7.19 percent.

The gains came as a sustained exchange of missile and drone attacks damaged tankers and disrupted shipments through the Strait of Hormuz, the narrow waterway between Iran and Oman that links the Gulf to the Arabian Sea. On a typical day, about one-fifth of global oil consumption moves through the strait from producers including Saudi Arabia, the UAE, Iraq, Iran and Kuwait. The route is also vital for diesel, jet fuel and gasoline supplies bound for major Asian consumers such as China and India.

Analysts said markets were reacting to the seriousness of the conflict while still treating it as a geopolitical shock rather than a structural supply crisis. The International Energy Agency said it was in contact with major Middle Eastern producers and stands ready to coordinate the release of strategic petroleum reserves if needed.

Goldman Sachs reported that global visible oil inventories stand at 7.83 billion barrels, covering roughly 74 days of demand, close to historical norms. Citi expects Brent to trade between $80 and $90 this week but warned that attacks on regional oil infrastructure could push prices as high as $120 a barrel, assigning a 20 percent probability to that scenario.

Tensions extended beyond oil. Saudi Arabia said it intercepted and destroyed two drones targeting the Ras Tanura refinery. According to the Saudi Press Agency, debris from the interception caused minor damage and a small fire, which was quickly contained. No injuries were reported, and crude and fuel supplies to local markets were unaffected.

Gas markets are also on edge. Goldman Sachs said European natural gas prices could more than double if shipments through the Strait of Hormuz were halted for a month. Around one-fifth of global liquefied natural gas, largely from Qatar, passes through the strait.

Egypt has halted gas supplies to Syria and Lebanon after Israel suspended flows from its eastern Mediterranean fields. Cairo has redirected volumes received via a regasification vessel at Jordan’s port of Aqaba to meet domestic demand and support Jordan’s power system.