Brent surges to $120 as Strait of Hormuz faces 'critical' threat
Transit capacity plunges 86% amid Iran conflict, triggering largest IEA reserve release in history
Global oil markets entered crisis territory this week as Brent crude surged to $120 per barrel following a critical threat declaration at the Strait of Hormuz, the world's most important oil transit chokepoint.
The United Kingdom Maritime Trade Operations raised the regional maritime security posture to 'CRITICAL' on March 1, citing escalating missile and drone attacks on commercial vessels and explicit Iranian threats to close the strategic waterway. Transit capacity through the strait has plummeted 86% below baseline, with only 116 vessels crossing between March 1-19—a 95% reduction from normal traffic flows.
Brent crude prices rocketed from approximately $67 before the conflict to $92 per barrel, briefly touching $126, marking the first time oil has breached $100 in four years. The International Energy Agency's executive director Fatih Birol characterized the situation as the 'greatest threat to global energy security in history.'
By March 17, UKMTO had documented 22 incidents—including 16 attacks and six suspicious activities—affecting vessels in the Arabian Gulf, Strait of Hormuz, and Gulf of Oman. Major shipping firms have suspended operations in the region, effectively choking off a waterway that handles approximately 20% of daily global oil consumption, or about 20 million barrels per day.
The emergency triggered an unprecedented coordinated response from the international community. IEA member countries agreed to release 400 million barrels from emergency reserves—the largest drawdown in the agency's history. The United States is contributing 172 million barrels from its Strategic Petroleum Reserve, with European and American supplies expected to reach markets by the end of March.
NATO allies are coalescing to secure safe passage through the strait, with a coalition of 22 nations forming to protect commercial shipping. Iranian officials have threatened to 'completely close' the strait if its facilities are targeted and reportedly began planting naval mines in the waterway.
The economic impact is spreading rapidly. The U.S. Energy Information Administration projects Brent will remain above $95 per barrel for at least two months, while Bank of America revised its 2026 average forecast to $77.50 from $61, warning that prices could reach $130 if disruptions extend into the second half of the year. Goldman Sachs analysts indicate prices could stay above $100 through 2027 in prolonged disruption scenarios.
Saudi Arabia is reportedly working to expand alternative pipeline capacity to bypass the strait, though analysts caution that such infrastructure would take months to meaningfully offset lost volumes. For now, global markets remain hostage to one of the world's most vulnerable geopolitical flashpoints.