Oil prices just made a jump not seen in years. Brent crude is up 36% year-to-date in 2026, surpassing $83 per barrel, while WTI has climbed 32%. The reason: the conflict between the U.S., Israel, and Iran has effectively shut down the Strait of Hormuz, through which one-third of the world's seaborne oil passes. I've been following commodity markets for years and this is the most serious energy crisis since 2022.
What's happening at the Strait of Hormuz
Following Operation Epic Fury (coordinated U.S.-Israeli strikes against Iran's nuclear infrastructure), Tehran responded with missile attacks against Gulf countries. The result: the Strait of Hormuz is effectively closed.
According to Vortexa data, tanker transits dropped from an average of 24 vessels/day to just 4 on March 1, and 3 of those 4 were Iran-flagged. Insurers have withdrawn coverage, making commercial shipping impossible even though the strait isn't physically blockaded.
Price impact: the numbers that matter
| Indicator | Before crisis (Feb 28) | Today (March 5) | Change |
|---|---|---|---|
| Brent crude | $73/barrel | $83/barrel | +14% |
| WTI crude | $67/barrel | $77/barrel | +14% |
| Natural gas (Europe) | Base | +30% | Spike |
| Natural gas (U.S.) | Base | +5% | Moderate |
| LNG freight rates | Base | +40% | Spike |
| U.S. gasoline (estimated) | $3.10/gal | $3.35/gal | +$0.25 |
How this directly affects you
Every $10 increase in crude oil translates to +$0.25 per gallon of gasoline in the U.S. But the impact goes far beyond the pump:
- Gasoline: If Brent hits $100 (Bank of America scenario), gas could exceed $4/gallon
- Food: Natural gas is a key input for fertilizers. Expensive fertilizers = expensive grains = expensive food. In my experience as an investor, oil crises always lead to food inflation 2-3 months later
- Inflation: Goldman Sachs estimates an additional 0.7 percentage points of inflation in Asia. Former Treasury Secretary Yellen warns U.S. inflation could rise to 3%
- Interest rates: The Fed becomes even more reluctant to cut rates. Forget July rate cuts if oil doesn't come down
What could happen next
According to Bank of America, if the Strait disruption persists, Brent could exceed $100 per barrel and European natural gas could top 60 EUR/MWh.
Worst-case scenario: a 6+ week interruption that pushes global inflation higher and forces central banks to pause rate cuts — or even raise rates.
What you can do with your money
- If you drive: Fill up your tank this week. Gas prices lag crude by 2-3 weeks
- If you invest: Consider energy exposure (ETFs like XLE, USO) as a hedge. The S&P 500 energy sector is already up 12% this week
- If you have a variable-rate mortgage: Refinance to fixed if you can. Oil inflation puts pressure on rates to rise, not fall
- Food: Prices will take 2-3 months to reflect the increase. Don't panic yet, but adjust your budget
Mistakes to avoid
Panic selling your investments
A mistake I've seen people make many times in past crises. Geopolitical crises cause short-term volatility but markets recover. The S&P 500 has survived every Middle East war.
Going all-in on oil
Buying oil after a 36% rally is buying high. If there's a diplomatic deal (Trump-Xi meeting in March), prices could drop as fast as they rose.
Neglecting your emergency fund
If inflation rises to 3%, your money in a checking account is losing purchasing power. Make sure you have at least 3-6 months of expenses in a high-yield savings account.
Resources to dig deeper
- Strait of Hormuz crisis - Al Jazeera
- Central bank and inflation impact - CNBC
- Weekly Petroleum Status Report - EIA
- U.S. gas price tracker - GasBuddy
This article is for informational and educational purposes only. It does not constitute personalized financial advice. Investment decisions are the sole responsibility of the reader.
