Iran War Fears: Oil Prices Soar as Strait of Hormuz Crisis Looms
The Islamic Revolutionary Guard Corps (IRGC) is establishing a vetting and registration system for ships transiting the Strait of Hormuz, as Iran transitions to what it describes as a “selective” blockade of the vital waterway, according to reports from Lloyd’s List and Al Jazeera. The move comes as the United States continues aerial campaigns against Iranian targets, initiated on March 19, 2026, in an effort to reopen the strait following its closure by Iran in response to the escalating conflict that began February 28, 2026, with U.S. And Israeli airstrikes and the assassination of Iran’s Supreme Leader, Ali Khamenei.
Several nations, including India, Pakistan, Iraq, Malaysia, and China, are reportedly engaged in direct negotiations with Tehran to secure passage for their vessels through Iranian territorial waters, Lloyd’s List reported. Ships are currently being approved on a case-by-case basis, but the IRGC is developing a more formalized system requiring detailed information about vessel ownership and cargo destination. This information is being communicated through intermediaries linked to Iran, operating outside of the country.
Iran’s Foreign Minister Abbas Araghchi stated this week that the Strait of Hormuz is “open, but closed to our enemies,” signaling a potential de-escalation from earlier, more aggressive statements made by the IRGC regarding any vessel attempting transit. However, the IRGC has also claimed “complete control” of the Strait of Hormuz, according to reports from Al Arabiya citing comments by Guards Navy official Mohammad Akbarzadeh.
The developments are occurring as global oil prices surge and supply chains face significant disruption. United Airlines CEO Scott Kirby stated on Friday that the airline is planning for oil prices to reach $175 a barrel, and remain above $100 through 2027, though he acknowledged this may not reach to pass. The Nasdaq entered a correction on Friday, marking its fourth consecutive week of decline, reflecting market anxiety over the conflict’s potential economic ramifications.
The U.S. Military has responded to the situation, with the Chairman of the Joint Chiefs of Staff stating that forces are “hunting and killing” watercraft used by Iran to impede traffic in the strait. President Trump has issued increasingly strong warnings, threatening to strike Iranian power plants if the Strait is not reopened within 48 hours. Several U.S. Allies have indicated a willingness to support efforts to secure safe passage, though a concrete plan of action has yet to be implemented.
Energy market expert John Kilduff of Again Capital, speaking on a CNBC CFO Council call, indicated that the market is focused on the next two weeks as a critical window for resolving the situation. He warned that if the Strait remains closed beyond April 1, oil prices could climb well above $100 per barrel, potentially leading to shortages in Asia and industrial production cutbacks in countries like India, Japan, and South Korea. Kilduff noted that while strategic petroleum reserve releases and existing oil storage capacity offer some buffer, the scale of the potential supply disruption – estimated at 10 to 12 million barrels per day – is “insurmountable” through policy measures alone.
Kilduff also suggested that even if the Strait is reopened, an enhanced risk premium is likely to remain embedded in oil prices due to ongoing instability in the region and damage to oil facilities. He cited the potential for Iran to retaliate against neighboring countries, particularly the UAE, if attacked, and warned that a successful Iranian attack on Saudi, Kuwaiti, or Iraqi infrastructure could trigger a $20 per barrel price spike. QatarEnergy’s CEO recently stated that repairs to facilities damaged in an Iranian attack that took out 17% of Qatar’s liquefied natural gas export capacity could capture three to five years.
President Trump stated on Friday that the Strait of Hormuz “will have to be guarded and policed, as necessary, by other Nations who use it — The United States does not!” The administration’s position remains unchanged as of Saturday, with no further announcements regarding a coordinated international effort to secure the waterway.