Oil Climbs to $110 as Hormuz Closure Nears Critical Point
Three weeks into the Iran war, oil has surged 60 percent and U.S. gas prices top $3.84 a gallon — with JPMorgan warning of a catastrophic supply collapse if Hormuz stays blocked past March 30.
Every time an American pulls up to a gas pump, the Iran war arrives in their wallet. Three weeks into the conflict, U.S. gas prices have surged from just over $3 to $3.84 per gallon. If the Strait of Hormuz remains closed past March 30, JPMorgan analysts warn Gulf producers will exhaust storage and be forced offline — sending oil prices higher still.
The disruption traces directly to the strait, where Iranian attacks on regional energy infrastructure have shut down one of the world's most critical maritime chokepoints. The economic pain landed fast and hard.
The strait carries 20 percent of global oil supply. Twenty million barrels per day that normally transit through the narrow waterway are now largely halted. Two hundred tankers loaded with crude and LNG sit anchored or rerouted around Africa, adding weeks to delivery times and strangling global supply.
JPMorgan analysts issued a stark warning last week: Gulf oil producers have approximately 22 days of storage capacity remaining. If the strait stays blocked beyond March 30, Saudi Arabia, Kuwait and the UAE face forced shutdowns of roughly 20 million barrels per day of production.
"We estimate that if the conflict lasts more than three weeks, [Gulf] oil producers would exhaust storage capacity and would be forced to shut in production," said Natasha Kaneva, JPMorgan's head of global commodities strategy, in research widely circulated by March 15. "Under this scenario, Brent could trade in the $100-$120 range."
Brent crude has already climbed 60 percent since the war began Feb. 28. Dubai crude, the benchmark for Middle Eastern grades, hit a record $157.66 per barrel last week. Markets have priced in a prolonged disruption with little expectation of resolution.
The closure has gutted Gulf energy infrastructure. Saudi Arabia's Ras Tanura refinery — capacity 550,000 barrels per day — sat dark for 16 days after drone strikes before reopening March 18. That single shutdown carved a meaningful volume from an already strained regional supply.
Qatar halted LNG production at the world's largest export facility, Ras Laffan, and a March 18 Iranian missile attack damaged an additional 17 percent of the nation's LNG export capacity. QatarEnergy estimates repairs could take three to five years.
Asian refiners have begun cutting run rates as supply tightens. China's Sinopec slashed operations by 10 percent. Japanese refineries now run at 69.1 percent utilization, down from 77 percent before the war. The demand destruction is not offsetting the supply shock.
The United States carries more cushion than Europe. The Energy Department authorized releasing 172 million barrels from the Strategic Petroleum Reserve, with delivery scheduled to begin March 18, 2026, and take approximately 120 days to complete. The Trump administration also announced a $20 billion reinsurance program through the Development Finance Corporation to cover ships transiting the Gulf, with U.S. Navy escorts available if necessary.
The DFC insurance program does not add a single barrel to supply. It transfers financial risk from shippers to the federal government — leaving consumers to absorb the real cost at the pump.
Energy Secretary Chris Wright told NBC that Americans "will feel it for a few more weeks," adding there is "a very good chance that gas prices would dip below $3 a gallon come summer." The EIA projects U.S. gasoline prices will average $3.34 in 2026 and $3.18 in 2027, with no forecast below $3 per gallon through the end of 2027.
Europe faces a steeper climb. Dutch TTF natural gas prices more than doubled since late February. European Commission President Ursula von der Leyen called for a "comprehensive look at how to reduce people's energy bills."
The Pentagon has requested $200 billion in supplemental war funding. Defense Secretary Pete Hegseth told reporters, "It takes money to kill bad guys." That request follows $11.3 billion spent in the first week of conflict alone.
Power plant strikes, if executed, would mark a sharp escalation. Industrial shutdowns would follow, stripping additional barrels from global supply just as Gulf producers approach their storage limit.
Fitch Ratings projects Brent could average $120 per barrel in 2026 under a six-month disruption scenario, spiking to $130–$170 per barrel at peak disruption — numbers the market has already begun to internalize.
For every American driver, the cost of war is no longer counted in lives and headlines alone. It is measured in dollars at the pump, week after week, for as long as the strait stays closed.