David Somoza-Cano — On the morning of March 12, 2026, United Airlines stock plummeted 33% in a single trading session. Crude oil surged past $100 a barrel. Tankers were burning in the Persian Gulf. Unexpectedly, Washington authorized the sale of Russian oil that has been sanctioned for years. This is not a routine market correction. This is a full-blown global energy crisis — and the repercussions will be felt at every gas pump and airline ticket counter in the country.
The trigger: a joint U.S.-Israeli military campaign against Iran that began on February 28, 2026, has cascaded into what the International Energy Agency is calling the largest supply disruption in history. Iran controls the Strait of Hormuz, a narrow, 21-mile-wide chokepoint through which roughly 20% of the world’s daily oil supply normally flows. Tehran has now effectively closed it, and the economic shockwaves are being felt from Wall Street to Tokyo to Riyadh.
The Strait of Hormuz: The World’s Most Dangerous Bottleneck
The Strait of Hormuz has long been recognized as one of the most important trade routes in the global economy. Every day, some 20 million barrels of oil, crude from Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE, transit its narrow shipping lanes. Around one-fifth of global oil trade also passed through the strait in 2024, primarily from Qatar.
Since March 2, Iran’s Islamic Revolutionary Guard Corps (IRGC) has closed the strait and backed up that declaration with force. Tanker traffic has dropped by approximately 90%, with hundreds of ships anchored on either side, unwilling to risk drone strikes, missile attacks, or seizure by Iranian naval forces. Insurance on any vessel attempting the crossing has become prohibitively expensive, or simply unavailable.
Iran accomplished this not with a conventional naval blockade, but with a far simpler and cheaper weapon: drones. As NPR reported, all Iran had to do was carry out several strikes near the strait, and insurance companies and shipping firms decided the risk was simply too great.
Recently, Iran’s newly appointed Supreme Leader Mojtaba Khamenei—who succeeded his father, Ayatollah Ali Khamenei, killed in an Israeli strike early in the conflict—issued his first public statement, vowing to keep the strait closed as a “tool to pressure the enemy” and demanding that all U.S. military bases in the Middle East shut down immediately. Oil prices spiked again within minutes of the broadcast.
Airlines in Freefall: United, Delta, American Get Crushed
Few sectors are more immediately vulnerable to an oil price shock than commercial aviation, and the numbers since the war began have been devastating. Jet fuel prices, which hovered around $85–$90 per barrel before the strikes on Iran, have surged to between $150 and $200, effectively doubling in a matter of days.
Because of the spike in jet fuel expenses, the carnage on equity markets has been severe. United Airlines (UAL) fell 33% on March 12 alone, after withdrawing its 2026 financial guidance. American Airlines (AAL) has shed roughly 24% of its value in the past month. Delta and Southwest have fared only marginally better.
For passengers, the pain is just as acute. A round-trip Seoul-to-London flight on Korean Air that cost $564 one week ago jumped to $4,359 on March 11. More than 37,000 flights to and from the Middle East have been canceled since the war began. Airlines operating routes over or near the conflict zone are forced to reroute, carry extra fuel, or make unplanned refueling stops.
When Contracts Meet Crisis
The closure of the Strait of Hormuz is also generating a wave of live legal disputes. QatarEnergy, Kuwait Petroleum Corporation, and Bahrain’s Bapco Energies have all declared force majeure — the contractual clause that suspends delivery obligations when events beyond a party’s control make performance impossible. Aluminium Bahrain followed, suspending metal deliveries to customers unreachable through the strait. Whether a given contract’s force majeure provision covers a state-imposed blockade — and whether performance was truly prevented or merely made more expensive — will be litigated or arbitrated long after the last tanker clears the strait.
Washington’s New Lifeline: Unlocking Russian Oil
On March 12, in one of the most unexpected policy reversals of the Trump administration’s second term, the Treasury’s Office of Foreign Assets Control issued a new license authorizing the delivery and sale of Russian crude oil and petroleum products loaded on vessels on or before 12:01 a.m. Eastern Time on March 12, valid through April 1.
In a post on X, Treasury Secretary Scott Bessent framed the move as a short-term pressure valve, stressing that it “will not provide significant financial benefit to the Russian government” since it only covers oil already loaded on ships. Bessent said the decision would “alleviate pressure caused by Iran’s attempt to take global energy hostage.” On Fox Business, he went further, saying the U.S. is actively considering fully removing sanctions from hundreds of millions of barrels of Russian crude still stranded at sea.
Simultaneously, the Trump administration and the International Energy Agency (IEA) have coordinated the largest emergency release of strategic oil reserves in history: 400 million barrels from a 32-nation coalition, including 172 million barrels from the U.S.
Final Remarks
Oil is as volatile as ever — Brent crude surged from $70 to nearly $120 a barrel within days of the war’s start, then dropped sharply back toward $90 in a single session. For American consumers, the immediate pain is already visible: gas prices have surged to $3.79 per gallon — up from $2.98 the day before the war began.
Speculation about an end to the conflict has been widespread. President Trump has promised prices will “drop like a rock” once the war is over, while Defense Secretary Hegseth said the same day that the war would not end until “the enemy is totally and decisively defeated.” At least for now, one thing is clear: the era of cheap oil is over.
