Oil Markets Reel as Strait of Hormuz Closure Triggers Global Supply Shock

Shipping traffic through the Strait of Hormuz has ceased entirely, marking the first complete blockade of the chokepoint since 2019, as military tensions between Iran and regional partners escalated over the past 72 hours. The strait, which handles approximately 21% of all seaborne crude oil—around 18 million barrels per day—has become a focal point of global energy security concerns. Brent crude futures (CL=F) jumped to $118.40 per barrel, a 12.6% increase from Friday's close, while WTI climbed to $114.70. The S&P 500 Energy Select Sector ETF (XLE) dropped 5.3%, reflecting investor flight to safety. The CBOE Volatility Index (^VIX) rose to 38.1, its highest level since November 2023, underscoring widespread investor anxiety. The disruption affects major exporters including Saudi Arabia, Iraq, and UAE, whose crude exports rely almost entirely on the strait. Tanker tracking data shows over 140 vessels halted in the region, with rerouting options via the Cape of Good Hope adding an average of 12 days and $15–$20 per barrel in transport costs. The International Energy Agency has paused its monthly market report to assess the implications of the supply chokepoint. Energy firms with significant Middle East exposure, including Aramco and ADNOC, are reassessing export schedules. Defense contractors such as Lockheed Martin and Raytheon are seeing increased demand for surveillance and maritime security assets. The United States and European allies have activated naval task forces in the Arabian Sea to monitor the situation and protect commercial shipping.