U.S. Oil Market Faces Disruption Amid Strait of Hormuz Closure

Since late February 2026, the Strait of Hormuz has been effectively closed due to the U.S.–Iran conflict, disrupting oil supply and causing a significant rise in global crude oil prices. The price of West Texas Intermediate (WTI) crude oil surged from $65 in February to nearly $100 by May, marking a 54% increase. This situation has led to a real oil price shock of 33%, which, while smaller than historical shocks from previous conflicts, still poses substantial economic risks. The U.S. government is considering a crude oil export ban as a response to potential price increases at the pump, especially with elections approaching in November. The ongoing conflict and supply disruptions could lead to inflationary pressures and reduced consumer spending, reminiscent of economic downturns following past oil shocks.

Key Points: • The Strait of Hormuz has been closed since late February 2026, impacting oil supply. • WTI crude oil prices increased by 54%, reaching nearly $100 per barrel by May. • U.S. policymakers may reconsider an oil export ban to manage rising gasoline prices.