US-Iran conflict causes oil market to erupt

Escalating US–Iran tensions have unsettled global oil markets, with the Strait of Hormuz effectively closed and under Iranian control. Approximately 20 million barrels per day usually transit the chokepoint, volumes now held within the Persian Gulf.

Some supply can be rerouted through Saudi Arabia’s East-West pipeline, which has a capacity of 7 million barrels per day, and the UAE’s pipeline to Fujairah, which handles 1.7 million barrels per day. These alternative routes provide only partial relief. With the Strait remaining closed, the market will need to rebalance through higher prices, mirroring the dynamics observed during the first year of the coronavirus pandemic.

Meanwhile, damage to regional infrastructure and oil fields points to a structurally tighter supply, supporting elevated prices over the medium term.

Crude prices climb amid geopolitical uncertainty

The Brent crude futures front-month contract ended February at $72.39 per barrel and rose over 50% in March settled at $118.35. The US national gasoline average retail price has now broken above $4 per gallon, according to the AAA Travel. Meanwhile, WTI settled above $100 per barrel on March 30 for the first time since 2022. Then it settled above $100 per barrel for over 80 days in a row after the Russian invasion of Ukraine. Both developments are likely to draw the attention of the US administration, given the current political focus on gas prices.

Refined products bear the brunt of the shock

The real pressure is showing up in refined product prices, particularly in Asia. The FOB Singapore gasoil price was trading above $250 per barrel over triple its price at the beginning of the year. The impact will be most pronounced in regional refined products as markets adjust to the supply shock caused by the closure of the Strait of Hormuz. While US consumers may face higher prices at the pump, energy supply remains secure: the US is a net energy exporter and retains the pricing power to attract the marginal barrel.

Policy measures such as the 400-million-barrel release coordinated by the International Energy Agency, the easing of sanctions on Russian and Iranian oil at sea, and a temporary waiver of the Jones Act have helped curb price spikes.

Still, these interventions are limited in scope. If the conflict persists, prices are likely to climb further. The recent resurgence of Houthi rebels in Yemen threatens another key chokepoint, the Bab al-Mandab Strait. Meanwhile, Ukraine’s renewed drone strikes on Russian oil assets and export capacity could tighten the global oil market even further.

US Gas Futures below $3 per MMBtu

On March 30, US front-month gas futures contracts were trading beneath $3 per million British thermal units (MMBtu) despite the Iran-US conflict and are over $1/MMBtu lower than the same time a year ago.

Limited US export capacity combined with abundant domestic supply has helped insulate the country from the global energy shock, even as roughly a fifth of the world’s liquefied natural gas (LNG) passes through the Strait of Hormuz.

Compared with previous disruptions from the Iranian Revolution in 1979, to the 2008 commodities super-cycle, and the Russian invasion of Ukraine – US prices remain relatively muted. This stability is crucial for electricity costs, inflation, and industrial

activity. Elsewhere, however, natural gas prices have surged sharply due to the Strait of Hormuz blockage and damage to Qatar’s Ras Laffan processing facilities, which could take up to five years to fully repair.

New LNG capacity begins to ease pressure

The Golden Pass liquefied natural gas (LNG) facility in Texas, United States a Qatar-backed project brought its first of three LNG units online on March 30, 2026, and is expected to ship its first cargo in the second quarter of 2026. Once all three units are operational, the plant will have an annual production capacity of 18 million tonnes, providing a meaningful boost to global LNG supply.

PJM Interconnection plan for colocation faces critique

The Pennsylvania-New Jersey-Maryland Interconnection (PJM) proposed a colocation framework for generation with large loads but has faced a backlash. The Federal Energy Regulatory Commission (FERC) highlighted opposition from several stakeholders from power producers to data centers. The opposition highlighted grid rigidity, limits to flexibility, delays, and disincentives to generation. PJM’s proposal came after the FERC’s order for the creation of an environment for the colocation of data centers and large loads at power plants. In today’s volatile US energy markets, Marex combines global clearing with CSC Commodities’ trading expertise. From derivatives in refined products, freight, and environmental markets to seamless exchange access, we provide an integrated solution to help counterparties manage risk with confidence.

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