Crude oil ripped through the $100 barrier on Sunday night for the first time since mid-2022, and kept climbing. Brent peaked above $119 a barrel in thin overnight trading before pulling back to around $107.53 by early Monday. West Texas Intermediate followed a near-identical path, touching $119.48 before settling near $103.14.
The catalyst is no mystery. Iran's blockade of the Strait of Hormuz has shut down the most important oil chokepoint on the planet. Roughly 15 million barrels a day, about a fifth of global supply, normally pass through the narrow waterway between Iran and Oman. That flow has now stopped almost entirely.
Storage tanks are filling up
The blockade is not just stopping exports. It is forcing producers on the Persian Gulf to slash output because they have nowhere to put the crude. Iraq, Kuwait, and the UAE have all cut production as onshore storage approaches capacity. With pipelines and terminals designed to feed tankers that are no longer coming, the backlog is growing fast.
Iran itself exports around 1.6 million barrels a day, mostly to China. Those shipments have also halted, though Beijing has been drawing down its strategic reserves to offset the gap.
Gasoline prices spike at the pump
American drivers are already feeling it. Regular unleaded jumped to $3.45 a gallon on Sunday, up 47 cents in a single week. Diesel hit $4.60, an 83-cent weekly increase. Both are the largest one-week moves since the aftermath of Russia's invasion of Ukraine in 2022.
Energy Secretary Chris Wright tried to calm nerves, telling reporters that gasoline would return below $3 a gallon "before too long." He called the timeline "weeks, not months" in a worst-case scenario. Markets were not convinced.
Stock markets buckle
The oil shock sent equities lower across Asia and into US futures. Tokyo's Nikkei 225 fell more than 7% in early Monday trading. South Korea's KOSPI dropped 8%. US futures pointed to sharp losses at the open, with S&P 500 contracts down 1.6% and Dow futures off roughly 450 points.
The last time crude traded above $100 was June 30, 2022, when WTI closed at $105.76. Before that, triple-digit oil had not been seen since 2014.
What comes next
Traders are watching two things. First, whether the US Navy can actually escort tankers through the strait. The White House ordered the Navy to begin escort operations last week, but commanders have warned publicly that the fleet lacks the capacity to protect commercial shipping at scale while maintaining combat operations against Iran.
Second, there is the question of how long Gulf producers can afford to keep wells shut. Saudi Arabia, Iraq, and the UAE depend heavily on oil revenue. Every day of lost exports costs billions. But without safe passage through Hormuz, the crude has nowhere to go.
Brent gained 28% last week. WTI surged 36%. If the strait stays closed, analysts at Goldman Sachs and JP Morgan have warned that $120 or even $150 oil is not out of the question.