On February 28, 2026, the United States and Israel launched ‘Operation Epic Fury’ on Iran, killing the Islamic regime’s Supreme Leader Ayatollah Ali Khamenei. Iran responded with equal rage bombing all US targets across the West Asia region, including Tel Aviv, UAE, Qatar, and even Oman, among others. Within 72 hours, one of the world's most critical shipping lanes had effectively shut down. The world had seen this before — in 1973. It did not end well then either.
Tanker traffic through the Strait of Hormuz dropped by approximately 70% within days of the strikes, with over 150 ships anchoring outside the strait to avoid risks. Traffic soon went to near zero. Though Iran has ‘officially’ declared this area a no-go zone for Israel, the US, and its European allies, but the impact is far-reaching. As late as on March 8, the United Arab Emirates and Kuwait started reducing oil production due to the near-closure of the Strait and amid "Iranian threats against safe passage of ships through the Strait of Hormuz." The cutbacks by the UAE and Kuwait lead to similar moves by other OPEC members in the Gulf region, including Iraq and Saudi Arabia.
About 13 million barrels per day moved through the strait in 2025 — roughly 31% of all seaborne oil flows globally, according to a CNBC report. One-fifth of the world's LNG also passes through the waterway, along with 30% of Europe's jet fuel supply.Qatar, which supplies a significant share of global LNG, as per the report in Time magazine, confirmed it had ceased production at its two main LNG facilities after Iranian drone attacks on its Ras Laffan and Mesaieed industrial cities.
The cost of moving oil spiked immediately. The benchmark freight rate for Very Large Crude Carriers — used to ship 2 million barrels from the Middle East to China — hit an all-time high of $423,736 per day, a jump of more than 94% from Friday's close, CNBC reported. Leading marine insurers, including Norway's Gard and Skuld, Britain's NorthStandard and the London P&I Club scrapped war risk cover for vessels in the region entirely. And, President Trump intervened via social media post to sell insurance. Trump ordered the US Development Finance Corporation to provide political risk insurance to shipping companies navigating the Persian Gulf "at a very reasonable price." The DFC offers protection against losses due to "declared or undeclared war." Excess collections from those insurance premiums are typically credited to the US Treasury, according to a congressional research report.
Meanwhile, Brent crude has risen, as per the Time report, to around $83 per barrel within days. European natural gas futures jumped roughly 30%. US natural gas prices rose 5%. Wall Street analysts warned that a prolonged closure could push oil above $100 per barrel. One energy analyst told CNBC that in the worst case this situation could potentially be three times the severity of the 1973 Arab oil embargo.
The world has been here before. The lesson from 1973 is that it gets worse before the markets believe it will get better.
On October 6, 1973, Egypt and Syria launched a surprise attack on Israel — the Yom Kippur War. The US, being an all-weather ally, resupplied Israel. Arab OPEC (Organization of Petroleum Exporting Countries) members responded to the US-Israel duo by cutting oil exports. Oil prices jumped, according to the Bill of Rights Institute, from $2 per barrel to $11. Retail gasoline prices soared 40% in November 1973 alone. The average US retail price per gallon rose 43% between May 1973 and June 1974.
When OPEC put this embargo against the US in 1973, President Richard Nixon faced a significant crisis as this OPEC ban prohibited the exporting of oil to specified nations, including the United States, as well as began cuts in oil production. As a result, oil and gas prices spiked up, and resources became scarcer, prompting shock throughout the nation, and even other parts of the world.
US inflation hit 12.3% in 1974, up from 3.4% in 1972. Real GDP fell 2.1%. The Dow Jones lost over 45% of its value — the worst bear market since the Great Depression, according to a TrendSpider report. World economic growth, as per the research paper of ETH Zurich, collapsed from 6.9% in 1973 to 2.1% in 1974 and 1.4% in 1975.
And the most striking bit was not the loss due to oil shortage, but far beyond. The oil cut itself was not that big in dollar terms. 2.3 million barrels per day sounds like a lot, but at the prices of the time, the total value of the missing oil across the entire world was about $5.1 billion.
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