Global oil markets are surging as the escalating war between the United States and Israel against Iran sends shockwaves through energy supply chains, pushing crude prices sharply higher and triggering emergency responses from major importers across Asia.
Benchmark Brent Crude Oil climbed toward $84 per barrel, extending a dramatic rally that has already seen prices jump 12% in just three days. Meanwhile, West Texas Intermediate hovered near $77, as traders scrambled to assess the potential fallout from one of the most dangerous geopolitical flashpoints in decades.
The conflict, now entering its sixth day, has disrupted shipping routes, halted refinery exports in some countries, and forced energy-importing nations to prepare emergency measures.
Strait of Hormuz Becomes the World’s Biggest Oil Flashpoint
At the center of the crisis is the Strait of Hormuz, the narrow waterway connecting the Persian Gulf to the Indian Ocean and one of the most critical energy chokepoints on the planet.
According to the International Energy Agency, roughly 15 million barrels of crude oil per day passed through the strait in 2025, along with another 5 million barrels of refined petroleum products.
But ship-tracking data now show traffic through the corridor has collapsed by more than 95%, with major oil tankers refusing to enter the danger zone. A handful of vessels still moving through the region are reportedly switching off location transponders, a tactic commonly used in active conflict areas.
Even though Iranian military commander Amir Heydari said Tehran does not intend to formally close the waterway, the practical effect has been nearly the same.
For several days, crude shipments from Iran and other Persian Gulf producers have effectively been trapped, forcing some exporters to consider cutting production.
China, Japan, and India Rush to Protect Fuel Supplies
The disruption is already rippling through Asia’s energy markets.
In China, authorities have ordered major refiners to halt exports of diesel and gasoline to prioritize domestic fuel security.
Meanwhile:
Japan refiners have asked their government to release oil from strategic petroleum reserves
A large processor in India warned customers it would suspend product exports
The moves reflect growing fears that the conflict could escalate into a full-scale regional supply shock.
Tanker Strike Raises Stakes
Adding to the tension, Iranian state broadcaster Islamic Republic of Iran Broadcasting reported that a tanker in the northern Persian Gulf was struck by naval forces from the Islamic Revolutionary Guard Corps.
Such incidents are precisely what energy traders fear most.
“If we see even one more successful strike on an oil tanker or infrastructure, prices can spike sharply again,” said Priyanka Sachdeva, a senior market analyst at brokerage Phillip Nova Pte.
Insurance firms and governments are now racing to find ways to reopen the shipping corridor safely. The United States has reportedly proposed offering insurance guarantees and naval escorts to protect vessels traveling through the strait.
However, global insurance broker Marsh McLennan warned that arranging such coverage could take weeks.
Market Signals Flash Short-Term Supply Crisis
The oil futures market is already showing signs of panic.
The Brent prompt spread — the difference between the nearest contracts — has widened dramatically to $3.94 per barrel, up from just 57 cents a month ago.
This structure, known as backwardation, signals that traders are willing to pay far more for immediate supply than for oil delivered later.
Interestingly, contracts for later months are much cheaper. The October Brent contract trades nearly $11 below May prices, suggesting investors still believe the crisis could eventually ease.
Analysts Warn Prices Could Spike — But Oversupply Still Lurks
Despite the turmoil, some analysts argue the global market still has underlying buffers.
Ahead of the conflict, energy agencies warned that global oil inventories were relatively high, especially in China.
“There is still an oversupply,” said Alvin Lee of IG Asia Pte.
“If tensions de-escalate, crude could fall back into the $60 range.”
In the United States, crude inventories recently rose by 3.5 million barrels, reaching their highest level since last May, according to the U.S. Energy Information Administration.
Still, markets remain deeply uncertain.
Speaking in Sydney, David Solomon, chief executive of Goldman Sachs, said investors are still trying to understand how the conflict will unfold.
“There is a lot of uncertainty about the direction of this conflict and how it will be resolved,” Solomon said.
A War That Could Redraw Energy Markets
For now, the global oil market is entering a period of intense volatility.
With tankers stalled, exporters reconsidering output, and Asia scrambling for supply security, the conflict has already triggered a chain reaction across the energy system — from crude prices and shipping rates to refinery operations.
And with both sides signaling they will intensify operations in the coming days, traders are bracing for a possibility the world hasn’t faced in years:
a prolonged disruption to the most important oil artery on Earth.