Global oil prices climb one percent as Middle East supply disruptions and Strait of Hormuz closure offset US escort proposals

Oil prices hit $82.31 as U.S.-Israeli strikes on Iran disrupt supplies. Iraq cuts 1.5M bpd while the Strait of Hormuz remains effectively closed to transit.

By: AXL Media

Published: Mar 4, 2026, 5:47 AM EST

Source: The information in this article was sourced from CNA

Market volatility amid regional strikes

Oil prices advanced by approximately 1 percent on Wednesday as direct military engagements between U.S.-Israeli forces and Iran disrupted the world’s most critical energy corridor. Brent crude rose 91 cents to reach $82.31 per barrel, following a Tuesday close that marked its highest valuation since January 2025. Similarly, U.S. West Texas Intermediate (WTI) climbed to $75.19. Analysts at OANDA noted that the primary driver for these gains remains the lack of clear de-escalation signals, with the conflict currently threatening a region responsible for just under a third of total global oil production.

Iraq faces massive production shutdown

The conflict has forced a dramatic reduction in output from Iraq, OPEC’s second-largest producer. Iraqi officials confirmed that they have already cut production by nearly 1.5 million barrels per day—roughly half of their total capacity—due to a lack of viable export routes and reaching maximum storage limits. Authorities warned that if exports do not resume shortly, the country may be forced to shut down nearly 3 million barrels per day of output within days. This potential loss of Iraqi crude adds a significant supply shock to a market already reeling from the effective suspension of Iranian exports.

Strait of Hormuz transit effectively halted

Maritime security in the Persian Gulf has deteriorated as Iran has reportedly targeted tankers in the Strait of Hormuz, a chokepoint through which 20% of the world’s oil and liquefied natural gas (LNG) flows. Traffic through the Strait remains effectively closed, creating a logistical bottleneck that has sent global refineries scrambling for alternatives. While the U.S. administration has suggested military intervention to secure the passage, the current lack of safe transit has forced international shipping companies to avoid the area, leading to significant delays and increased freight insurance premiums.