Iran conflict upends shipping routes, jolting energy markets and economies worldwide
War at the Oil Chokepoints
The US–Israeli war with Iran has turned the Strait of Hormuz and Bab el-Mandeb into high-risk chokepoints, with attacks on tankers, a partial Hormuz blockade, and Houthis threatening to close Red Sea routes. Analysts describe the shock—around 8 million barrels per day disrupted—as the largest oil supply interruption in history, sending crude prices swinging from below $90 to near $120 and pushing gasoline toward $5 a gallon in places like Philadelphia. Governments and institutions are scrambling: the US invokes the Defense Production Act, taps emergency stockpiles, temporarily eases sanctions on Russian oil, and the Fed freezes rate hikes while Europe hesitates to join naval missions. Beyond immediate price spikes, markets are weighing recession risks, shifts away from the petrodollar as Iran eyes yuan payments, and the broader reshaping of global energy trade flows and geopolitical power.