Yeliz Akmaca 
As of March 4, 2026, the rapidly escalating US-Israel-Iran tensions in the Middle East are rattling oil markets. On Wednesday morning, Brent crude rose to $82.57, while US West Texas Intermediate (WTI) crude climbed to $75.28, after a roughly 5% gain over the previous two sessions. Attention is now focused on the energy flows through the Strait of Hormuz, as investors watch how geopolitical risks may impact global oil supply.
In short, the market is no longer driven by traditional data flows but is directly pricing in geopolitical risk.
Why Did Oil Rise?
Long-dominant drivers like inventory data, economic indicators, or OPEC statements have been temporarily overshadowed. According to Priyanka Sachdeva, senior market analyst at Phillip Nova, the price action is currently determined by something simpler: military developments in the Middle East.
Sachdeva identifies four key factors investors are closely monitoring in the near term:
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Physical oil exports from Gulf countries
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Verified tanker incidents
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US naval activity in the region
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Iran’s diplomatic and military statements
Any of these could trigger rapid price movements. Tanker security, in particular, is increasingly critical. The recent movements in energy markets are not limited to oil. European gas prices have surged in recent days, while refineries in Asia are seeking alternative supplies. These rapid changes suggest a new price equilibrium may be forming in global markets.
Strait of Hormuz Threatens Global Energy Flow
Israeli and US forces struck targets across Iran on Tuesday, prompting retaliatory strikes on energy infrastructure and tanker traffic. This region accounts for roughly one-third of global oil production.
Crucially, about 20% of global oil and LNG passes through the Strait of Hormuz, which is now effectively closed to tanker traffic. US President Donald Trump raised the possibility of the US Navy escorting oil tankers through the Strait if necessary, alongside political risk insurance and financial guarantees for maritime trade in the Gulf.
Markets remain cautious, as war risk insurance is rapidly being canceled and new mechanisms will take time to implement.
Iraq Production at Risk: 3 Million Barrel Exposure
The impact on oil supply extends beyond Iran. Iraq, OPEC’s second-largest producer, has cut production by approximately 1.5 million barrels per day due to storage limits and export disruptions.
If exports do not resume soon, Iraq could halt roughly 3 million barrels per day, potentially triggering another surge in global oil prices.
Rising Energy Prices Push Dollar Up, Euro Down
The rapid rise in energy prices is affecting not only oil but also global currency markets. The US dollar traded near a three-month high on Wednesday in Asia, while the euro fell 0.2% to $1.1590, extending a three-day losing streak.
George Saravelos, global head of FX strategy at Deutsche Bank, explains: the impact boils down to energy. Rising energy costs are effectively a dollar-denominated tax for European consumers, potentially putting pressure on the European Central Bank and sparking discussions about possible rate hikes.
Market Snapshot
- Brent Crude: $82.57
- WTI Crude: $75.28
- Euro/Dollar: 1.1590
- US Dollar Index: 99.2
How the Energy Crisis is Affecting Global Markets
Rising energy prices are forcing countries to look for alternative sources:
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India and Indonesia are exploring new energy supplies
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Chinese refineries are accelerating maintenance schedules
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Tanker traffic in the Gulf has slowed dramatically
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European natural gas prices surged nearly 70% in a few days
Such price shocks rarely affect a single market, impacting inflation, bond markets, currency, and equities simultaneously. The current period reflects exactly that chain reaction.
US Oil Inventories Rise Above Expectations
Despite geopolitical tensions, US inventory data provides a different signal. According to the American Petroleum Institute, crude stocks rose by 5.6 million barrels last week, well above the 2.3 million barrel expectation. Official figures from the US Department of Energy are expected later.
Normally, such a large inventory increase would push prices lower. But in the current environment, markets are focusing more on military developments in the Middle East.
Investors Eye Three Key Factors
Short-term oil price direction depends on:
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Whether the Strait of Hormuz reopens
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US naval escort plans
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Potential halt in Iraqi production
These combined could trigger another surge in oil prices—or the opposite. Geopolitical risks can rise and fall rapidly, and markets are aware. Prices rise… but caution remains.
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