Oil Surges as Iran Conflict Continues

U.S. crude prices jumped above $80 per barrel as the escalating conflict involving Iran disrupted oil shipments through the Strait of Hormuz, a critical passageway for global energy trade that carries roughly 20% of the world’s oil supply. Tanker traffic through the strait has largely halted following attacks and threats from Iran, including reports from Iranian state media that a missile struck an oil tanker and a British Navy report of a major explosion involving another vessel near Iraq.

As the conflict threatens global energy supplies, the U.S. Treasury Department issued a 30-day waiver allowing India to purchase Russian crude oil, temporarily easing earlier penalties imposed on New Delhi for buying Russian energy. Officials described the move as a short-term measure aimed at stabilizing global markets and preventing further price spikes as Middle Eastern exports face disruption.

Oil markets reacted sharply to the escalating tensions. West Texas Intermediate crude surged more than 8% to around $81 per barrel, while Brent crude climbed to nearly $85, marking the largest daily increase since 2020. Analysts say Indian refiners have already begun securing additional Russian cargoes—potentially 6 to 8 million barrels—to offset supply losses from Gulf producers.

The U.S. has also taken steps to ease pressure on global energy markets, including offering political risk insurance for tankers traveling through the Gulf and considering deploying the U.S. Navy to escort vessels through the region. President Donald Trump said the measures are intended to keep oil flowing despite the conflict, though the White House has not provided a timeline for when shipping through the Strait of Hormuz will safely resume.

Rising oil prices are already affecting American consumers. The average U.S. gasoline price has climbed to about $3.25 per gallon, up 27 cents in one week, the largest weekly increase since the energy shock following Russia’s invasion of Ukraine.

Treasury Secretary Scott Bessent said the waiver for India is a “deliberately short-term measure” that applies only to Russian oil already at sea, allowing cargoes to be unloaded in India between March 5 and April 4. He emphasized that the move would not provide significant financial benefit to Moscow and said the U.S. expects India to increase purchases of American crude over time.