Oil Prices Rise Amid Ongoing Conflict and Strait of Hormuz Closure

The United States and Israel initiated military action against Iran on February 28, 2026. In response, Iran closed the Strait of Hormuz, a passage through which about 20 percent of global oil and gas exports travel from the Middle East to Asia and Europe.

More recently, the United States implemented a blockade to prevent ships from carrying Iranian oil, aiming to pressure Iran to halt production once storage capacity is exhausted. Oil prices have risen as a result. ET, up from $67.02 before the conflict, while Brent crude was at $111.85, up from $72.87 on February 27.

This marks the highest level in nearly four years. The U.S. consumer price index rose to 3.3 percent annually last month, the highest since May 2024, driven by higher energy costs. The spillover effects from higher energy prices will add to core inflation over the next year.

“This reflects the passthrough of higher energy costs into non-energy commodities and services, which tends to peak three months after the initial energy shock,” an economist said in an email.

Economic forecasts indicate Brent oil prices to average about $113 per barrel in the current quarter before falling to just less than $80 per barrel by the end of this year. Negotiations seem stalled … and any near-term resolution seems difficult. The US economy is more resilient than some others, but at the end of the day, we’re going to see a global impact on prices.

This decision follows reported differences with Saudi Arabia over production quotas. Although the UAE aims to increase oil production and sales, the ongoing closure of the Strait of Hormuz limits feasibility in the short term. Disruptions affect global maritime trade — that includes minerals and energy-intensive commodities like fertilisers, chemicals, petcoke, cement, oilseeds and grains, which transit the strait at about 11 percent of global volume annually.