How the war on Iran is driving up gas and oil prices
Effects of the Iran war are rippling beyond the Middle East and into the spending habits of American consumers, who are seeing price surges for gasoline and other items.
Energy prices have increased since the near-total shutdown in early March of the Strait of Hormuz, a crucial waterway that carries 20% of the world’s oil shipments and about 20% of the world’s seaborne liquified natural gas. Most of the oil is from Saudi Arabia and Iraq.
Oil prices began rising March 3. In the United States, average gasoline prices hit $3.59 a gallon on March 11.
In response, the 32 nations of the International Energy Agency announced March 11 that they would release a record 400 million barrels of oil from their emergency reserves to limit oil market shortages.
That's about four days' worth of global oil production.
How much oil is the IAE releasing?
The International Energy Agency announced plans Wednesday for its largest-ever release of oil from its emergency reserves. The agency representing 32 member countries announced plans to release 400 million barrels of oil from its global strategic reserves in an effort to curb soaring crude prices.
The cubes superimposed below on the National Mall in Washington, DC, represent the volume of oil the IEA plans to release, and the 20 million barrels of oil a day that crosses the Strait of Hormuz.
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Why do energy prices rise in times of war?
Wars disrupt trade and commerce by restricting or eliminating shipping routes such as the Strait of Hormuz. Shippers usually pay more for insurance during times of war, which drives up costs.
Prices of food and energy products usually rise in wartime because wars disrupt global production and routes used for trade. That can spill over into the production of other commodities.
Gas and oil price spikes in U.S.
Israel and the United States attacked Iran on Feb. 28. Oil prices rose to $119 a barrel on March 9, the highest since 2022, Reuters reported. Prices dropped before the market closed.
Crude oil, gasoline, diesel, jet fuel, natural gas, petrochemicals, power, and fertilizer prices have all risen sharply since the war began.
IAE oil release sets new record
Though an effective closure of the strait has spurred fears of a global energy crisis, Iran is continuing to use the crucial waterway to export its own oil.
In recent days, Iran has moved more barrels of oil on a daily average than it did in February, according to The Wall Street Journal, which cited data from the tanker-tracking firm Kpler.
Chokepoints in the world's global oil
Because of the massive amounts of petroleum, other liquids and liquified natural gas that flow through them, chokepoints – narrow passages along popular international maritime routes – are vital to the world's energy trade and security.
The simultaneous disruption of several transportation routes, including energy, shipping and air cargo is expected to increase global inflation and put key world economies at risk of stagflation. This is on top of already existing political and tariff disputes, according to Oilprice.com.
President Donald Trump said he would ensure safety in the Strait of Hormuz as oil tankers have come under fire and U.S. airstrikes have destroyed minelaying ships.
Trump said normal shipping would soon return to the strait. "I think you're going to see great safety,” Trump told a reporter. “We have decimated that country. They're paying a big price now."
CONTRIBUTING Christopher Cann, Cybele Mayes-Osterman, Bart Jansen and Michael Loria
SOURCE USA TODAY Network reporting and research; Reuters; International Energy Agency