The world’s most important oil corridor is blocked, and US oil prices are surging as a direct result as the Iran conflict enters its third week with no diplomatic resolution in sight. Analyst Patrick De Haan has projected Monday pump prices of $3.85 per gallon, while $4 fuel remains a realistic near-term scenario. The strategic closure of the Strait of Hormuz has elevated this military conflict into a global economic crisis.
The conflict began on February 28 when the US and Israel launched the first strikes on Iran, setting in motion a series of supply disruptions that has pushed the national gasoline average 23% higher from below $3 per gallon to $3.70. The closure of the Strait of Hormuz, which Iran implemented as a retaliatory measure, has removed roughly one-fifth of global oil supply from international markets. The combined impact of infrastructure strikes and the Hormuz closure has created one of the most severe oil supply disruptions in recent history.
Friday’s US bombardment of Kharg Island, Iran’s central oil processing and export facility, further deepened the global supply crisis. Iran’s blockade of the Strait of Hormuz shows no sign of lifting, leaving the world’s most important oil shipping route effectively closed to international tanker traffic. Brent crude ranged from $103 to $106 per barrel Monday, while US crude settled around $94 after briefly touching $100 on Sunday.
California faces average pump prices above $5 per gallon, with some Los Angeles stations charging over $8. National diesel costs for commercial transport could reach $5.05 to $5.15 per gallon. Exxon CEO Darren Woods and the leaders of Conoco and Chevron have all briefed White House officials on the deepening supply crisis, with Woods specifically warning that speculative traders risk creating a price spiral that overstates the impact of physical supply conditions.
Wall Street gained modestly Monday as oil prices temporarily retreated, the S&P 500 rising about 1%. Oil company stocks have surged to all-time highs since the conflict began, benefiting from the same elevated prices that are straining consumer budgets. Restoring normal oil flow through the Strait of Hormuz is now the most urgent priority for stabilizing US oil prices and the broader global energy market.