Physical Oil and Fuel Prices Smash Records as Iran War Chokes Middle East Supply

Middle East supply chokepoints and the Strait of Hormuz throttle cause physical oil prices to smash records, with Dubai crude hitting $166.80.

By: AXL Media

Published: Mar 21, 2026, 9:26 AM EDT

Source: Reuters

The Strait of Hormuz Logistics Nightmare

The primary driver of the current price explosion is the throttling of the Strait of Hormuz. Transited by roughly 20% of the world's oil and gas, the narrow waterway has become a "logistics nightmare" as Iran threatens to fire on vessels. According to Petro-Logistics, daily flows have dropped by approximately 12 million bpd, representing 12% of total global demand. Experts warn that even a swift reopening would not immediately alleviate the crisis due to the massive backlog and disrupted shipping schedules.

Record Peaks in Physical vs. Futures Markets

While benchmark futures (like Brent and WTI) have surged, the "physical" market—where actual cargoes are traded—has seen much more violent price action.

Dubai Crude: Hit an all-time high of $166.80 per barrel on Thursday.

Jet Fuel (Europe): Reached a record $220 per barrel, as Europe relies heavily on Middle Eastern imports.