Oil spikes after Strait of Hormuz halts amid US Iran war

March 05, 2026 (MLN): Oil prices jumped on Thursday as concerns mounted over the ongoing closure of the Strait of Hormuz, a vital route for Middle East oil and gas exports.

The disruption comes amid escalating hostilities between the U.S. and Iran, which have choked critical energy flows and limited regional production.

Currently, Brent crude futures went up by $2.28, or 2.92%, to $83.78 per barrel, according to Mettis Global data.

West Texas Intermediate (WTI) crude futures increased by $2.54, or 3.40%, to $77.20 per barrel by [1:06 pm] PST.

The conflict intensified on Wednesday after a U.S. strike targeted an Iranian warship near Sri Lanka.

In response, U.S. Senate Republicans backed President Donald Trump’s military actions, rejecting a bipartisan resolution that sought to halt the air campaign and require congressional approval for further hostilities.

Meanwhile, Iraq, OPEC’s second-largest crude producer, has slashed output by nearly 1.5 million barrels per day due to storage shortages and restricted export routes, Reuters reported.

Qatar, the Gulf’s largest liquefied natural gas (LNG) exporter, also declared force majeure on gas shipments, with sources indicating that normal production could take at least a month to resume.

Shipping traffic through the Strait of Hormuz, which channels nearly 20% of the world’s energy supply, has been virtually halted for five consecutive days.

Britain’s maritime trade agency reported a significant explosion near a tanker 30 nautical miles southeast of Kuwait’s Mubarak Al Kabeer, followed by the sighting of a small craft leaving the area.

Despite the heightened risks, Iran has largely avoided striking critical energy infrastructure, keeping shipping threats high.

J.P. Morgan estimates that around 329 oil vessels are currently trapped in the Gulf.

The financial institution noted that while Gulf Cooperation Council (GCC) countries, including Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain, have storage capacity and high energy prices, these factors are constraining the duration of the U.S. military campaign.

Most affected oil fields are expected to resume operations within days, with full production generally restored within two to three weeks.

J.P. Morgan highlighted that the primary challenges lie in logistics and reservoir management, particularly in Iraq where water injection is essential to maintain production.

This combination of geopolitical tensions, logistical bottlenecks, and production cuts has fueled a surge in global oil prices, reinforcing the vulnerability of energy markets to Middle East instability.

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