Since March 4, Iran has declared the Strait of Hormuz closed to most shipping traffic and has been attacking vessels that try to pass through. About 20% of the world’s oil supply moves through that narrow waterway. The result is the largest oil market shock ever recorded.

Brent crude, the global benchmark, surged roughly 65 percent in a single month after the closure began, reaching around $94 per barrel by early June. That’s the highest monthly rise in the history of oil markets, according to the World Bank.

What the numbers look like right now

The U. S. Energy Information Administration, in its latest short-term outlook, forecasts Brent averaging around $105 per barrel through June and July 2026. That’s based on the assumption the strait stays effectively closed in the near term.

Analysts at Goldman Sachs and Bloomberg have modeled what happens if the closure continues into the third quarter. Their findings: oil prices could reach $200 per barrel. That number was considered extreme six months ago. It’s now part of mainstream forecasting.

Wholesale gasoline prices in the U. S. are projected to average $2.98 per gallon in 2026, an increase of nearly $1.00 per gallon compared to what the EIA was forecasting in February. At the pump, prices will vary by region and refinery margin, but the direction is clear.

Why the U. S. isn’t getting hit as hard as Asia

The good news, if there is any: America is one of the last places this crisis hits hardest. The U. S. is far more energy-independent than it was a decade ago, and it sources far less oil from Persian Gulf producers than buyers in Japan, South Korea, India, and China. Those countries face steeper price shocks and supply constraints first.

That doesn’t mean the U. S. is insulated. It means the worst-case scenarios land here later, not never.

What happens to inflation

A Dallas Fed working paper models three scenarios for the strait closure: one quarter, two quarters, or three quarters. The longer the closure holds, the worse the inflation outcome. A one-quarter closure adds roughly 0.35 percentage points to year-end PCE inflation. A three-quarter closure adds 1.47 percentage points.

Given that the Federal Reserve has been trying to bring inflation down to 2%, any sustained energy price shock complicates that goal significantly.

“The largest oil market shock in history… conflict in the Middle East and disruption in the Strait of Hormuz sent prices sharply higher and tightened global supply.”, World Bank Commodity Markets Outlook, 2026

“U. S. government officials and Wall Street analysts are starting to consider the prospect that oil prices might surge to an unprecedented $200 a barrel.”, Bloomberg, 2026

What has to happen for prices to come down

The EIA expects oil shipments through the strait to resume in the third quarter of 2026, but notes it will likely take months for traffic to ramp back to pre-conflict levels. Supply chains for crude shipping are not fast to rebuild once disrupted.

Iran has signaled it could extend the closure indefinitely if military pressure continues. The outcome depends entirely on diplomatic and military developments that are, at this point, unpredictable.

The broader context

The U. S. has faced oil shocks before. The 1973 Arab oil embargo. The 1979 Iranian Revolution. The Gulf War. In each case, prices eventually stabilized, but the short-term economic pain was real and often politically significant.

This one is different in at least one way: global oil demand is higher, the strait is the single biggest chokepoint for energy, and the conflict driving the closure has no obvious resolution timeline. Watching the price at the pump this summer is going to be one way millions of Americans track a distant war in real time.

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