The core event across all sources is the sharp escalation in oil prices and market volatility following the effective closure of the Strait of Hormuz amid intensifying conflict in the Middle East, particularly involving Iran, the United States, and Israel. Iran's new Supreme Leader, Mojtaba Khamenei, in his first public remarks, pledged to keep the Strait of Hormuz closed as a 'tool to pressure the enemy' and called for intensified attacks on US bases, further escalating geopolitical tensions and supply disruption risks [1][2][3][4]. The Commander of the Iranian Revolutionary Guard Corps Navy, Alireza Tangsiri, reinforced this threat, warning of 'the harshest blows to the aggressor enemy' [4].
Oil prices responded sharply: Brent crude surged 9.22% to close at $100.46 per barrel on Thursday, marking the first close above $100 since August 2022, while U.S. West Texas Intermediate (WTI) futures rose 9.72% to settle at $95.73 [4]. WTI hovered near $95.60 during European hours on Friday [2]. US crude prices have surged more than 40% since the conflict began [2]. The International Energy Agency (IEA) described the US-Israeli war on Iran as 'creating the largest supply disruption in the history of the global oil market' [2].
In response to the supply shock, several countries announced strategic reserve releases. The IEA announced a record release of 400 million barrels from strategic reserves, which covers only 25 days of the current disruption, according to Reuters [1]. Australia will release up to 762 million litres of fuel from reserves and reduce minimum stockholding requirements by up to 20% [2]. Japan plans to release about 80 million barrels from its reserves—roughly 45 days of supply—starting March 16, in coordination with the G7 and IEA [2].
To further stabilize markets, the US Treasury issued a 30-day waiver allowing countries to purchase stranded Russian oil at sea [1][3][4]. Treasury Secretary Scott Bessent described this as a 'narrowly tailored, short-term measure' not expected to provide significant financial benefit to Russia [3][4]. Buyers, including Thailand, Japan, and India, are already considering or preparing to negotiate purchases of Russian oil [3]. However, this move has drawn criticism from US allies and is seen as only partly offsetting the supply disruption [1].
The market reaction has been severe. Asia-Pacific equity markets tumbled: Japan's Nikkei 225 fell 1.16%, Topix dropped 0.57%, South Korea's Kospi slumped 1.7%, and Australia's S&P/ASX 200 declined 0.14% [4]. Honda Motor plunged over 6% after forecasting its first annual loss in almost 70 years [4]. Prediction markets raised the probability of a US recession to 32%, the highest level this year [4].
Forward-looking statements from analysts suggest oil prices are likely to remain elevated in the near term as investors price in the risk of a prolonged conflict [1][2][4]. Rob Thummel of Tortoise Capital expects prices to ease towards the end of the year as oil flows through the Strait of Hormuz are likely to resume [4]. Goldman Sachs forecasts Brent to average $98 per barrel in March and April—up 40% from the 2025 average—before falling to $71 by the fourth quarter. In a scenario where the strait is disrupted for one month, Brent could average $110 in March before gradually falling to $76 by year-end [4].
US President Donald Trump has downplayed the rise in oil prices, emphasizing that the US, as the world's largest oil producer, stands to benefit, while reiterating his priority to block Iran from obtaining nuclear weapons [4].
CONCLUSION
Oil prices have surged to multi-year highs as the closure of the Strait of Hormuz and escalating Middle East tensions drive fears of prolonged supply disruptions. Strategic reserve releases and a temporary waiver on Russian oil offer only partial relief, while equity markets have reacted negatively and recession risks are rising. Analysts expect oil prices to remain elevated in the near term, with potential easing later in the year if supply routes normalize.