DUBAI – Oil freight rates are surging and maritime traffic is slowing around the Strait of Hormuz, as escalating tensions following U.S. And Israeli strikes on Iran disrupt a key maritime corridor and threaten global energy flows. The cost to ship crude oil out of the Gulf has risen sharply, with some brokers reporting rates equivalent to $20 a barrel for deliveries to China, compared to an average of $2.50 last year, according to Gulf News reporting on March 3, 2026.
The disruption comes after the U.S. And Israel attacked Iran on Saturday, February 28, 2026, a development that could lead to a closure of the Strait of Hormuz, a vital oil export route, for days, Reuters reported.
The premium of physical Dubai crude has surged to $38 per barrel over its paper equivalent, indicating an immediate choke on supply, according to data compiled by Reuters columnist Clyde Russell. While crude futures prices briefly spiked to $119 per barrel earlier this week, they retreated to the $90s and were trading at $100 a barrel early Friday in Asian trade, suggesting the paper market is underestimating the severity of the physical supply disruption.
South Korea’s Sinokor is seeking approximately 700 Worldscale points to transport Middle East crude to China on very large crude carriers. A tanker controlled by Greece’s Dynacom Tankers Management was provisionally leased at 525 Worldscale, equivalent to daily earnings of about $350,000, Bloomberg reported.
The Strait of Hormuz, linking the Arabian Gulf to the Indian Ocean between Iran and Oman, is approximately 100 miles long and just 21 miles wide at its narrowest point. It carries roughly a fifth of the world’s oil supply.
Three more vessels were hit by unknown projectiles in the Strait of Hormuz on March 11, bringing the total number of ships struck in recent weeks to six, maritime security firms reported. This indicates merchant ships remain in the firing line.
U.S. President Donald Trump threatened further strikes on Iran’s Kharg Island oil export hub and urged allies to deploy warships to secure the Strait of Hormuz, as Tehran vowed to intensify its response, according to a statement released March 15, 2026. Trump stated that U.S. Strikes had “totally demolished” much of Kharg Island and warned of further action, telling NBC News, “We may hit it a few more times just for fun.”
The International Energy Agency (IEA) warned that the conflict is creating the biggest supply disruption in the history of the oil market, even after announcing the largest-ever coordinated emergency release of oil stocks, totaling 400 million barrels. The IEA-coordinated release will take weeks, possibly months, to reach the market, and the U.S. Portion of the release will take approximately 120 days to complete, according to ING’s commodities strategists Warren Patterson and Ewa Manthey.
Gulf producers have slashed their combined oil output by at least 10 million barrels per day, and over 3 million barrels per day of refining capacity in the Gulf region has already shut down due to attacks and a lack of viable export outlets, the IEA reported.
Analysts at Wood Mackenzie have stated that Brent Crude prices could surge to $150 per barrel in the coming weeks, and that $200 per barrel is “not outside the realms of possibility” in 2026. They noted that the current supply disruption is dimensionally bigger than the one following the 2022 Russian invasion of Ukraine, as Middle Eastern supply is now largely off the market.
The U.S. Treasury moved to allow, until April 11, purchases of Russian crude stuck in tankers in floating storage, anticipating competition between China and India for this supply. However, this supply will not offset the massive loss of Middle Eastern supply, most of which goes to Asia.
Energy Secretary Chris Wright told CNN on Thursday that oil prices are unlikely to hit $200 per barrel, stating, “but we are focused on the military operation and solving a problem.” At the same time, Wright told CNBC that the U.S. Navy is not yet ready to begin escorting oil tankers through the Strait of Hormuz.
Iranian Foreign Minister Abbas Araqchi said Iran would respond to any attack on its energy facilities. Iran’s Revolutionary Guards reported carrying out missile and drone strikes on targets in Israel and the U.S. On Sunday.
