Washington, United States. The Middle East war has severely disrupted global energy supplies, forcing higher prices and pressuring consumers to reduce consumption.
Strait of Hormuz disruption cuts global supply
The effective closure of the Strait of Hormuz, a narrow channel along the Iranian coast, has stopped the passage of 20% of the world’s oil and liquefied natural gas since the U.S. and Israel began airstrikes on Iran on February 28.
Energy infrastructure hit in ongoing strikes
Ongoing strikes by Iran and Israel have targeted Middle East energy infrastructure, damaging gas fields, oil refineries, and terminals that industry representatives say will take years to repair.
IEA cites worst disruption in history
The International Energy Agency has called the situation the worst global energy disruption in history, eclipsing the Arab oil embargo of 1973 that caused fuel shortages and widespread economic damage.
Prices rise as market loses supply
Dan Pickering, chief investment officer for Pickering Energy Partners, said the impact would be “price rises high enough that people stop consuming.” The crisis has removed about 400 million barrels, about four days of world supply, from the market, triggering price increases of around 50%.
Broader economic and political consequences
Oil, gas, and refined byproducts are used for transportation, power generation, and industrial production, including plastics and fertilizers. Aditya Saraswat, senior vice president at consultancy Rystad Energy, said the breadth of risk across fuels, chemicals, LNG and fertilizer inputs makes the moment qualitatively different from previous episodes of Gulf tension.
Energy price shocks can fuel inflation and affect consumers and businesses. The price impact has become a political liability for U.S. President Donald Trump as he seeks to justify the war to the American public. Trump has criticized NATO allies for their lack of support for the U.S.-Israeli war against Iran, calling them “cowards.”
How do you expect higher energy prices to affect your household or business costs?
