NEED TO KNOW

• Hormuz tanker traffic has collapsed from hundreds of daily transits to roughly 5 ships per day
• The IEA’s 32 member nations released 400 million barrels from emergency reserves, the largest drawdown in agency history
• Brent crude closed above $100 a barrel Thursday as markets shrugged off the reserve release and Iran threatened $200 oil

WASHINGTON, D.C. (TDR) — A waterway that normally moves 20 million barrels of oil per day is now processing roughly five ships. Two weeks into the U.S.-Israeli military campaign against Iran, tanker traffic through the Strait of Hormuz has collapsed to a trickle, with more than 300 vessels stranded in the Persian Gulf and no U.S. Navy escort operation in sight. The shutdown has triggered the largest emergency oil reserve release in history and pushed crude above $100 per barrel. It has also exposed an uncomfortable gap between the administration’s public confidence and what its own military officials are saying in private.

From Hundreds of Ships to Five: How Iran Did It

Iran did not need warships or naval mines to halt traffic through the strait. Not initially. The Islamic Revolutionary Guard Corps (IRGC) relied on a far cheaper and more effective tool.

“All [Iran] had to do was several drone strikes in the vicinity of the Strait of Hormuz. And all of a sudden, insurers and shipping companies decided that it was unsafe to traverse that very narrow S-curve of that waterway.” — Helima Croft, RBC Capital Markets

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The result was what Croft called “an insurance-driven shutdown.” Shippers could not get coverage, and without coverage, they would not sail. Tanker tracking data showed traffic dropping first by 70%, then to near zero. By the second week of the conflict, ship-tracking services confirmed daily transits had fallen to single digits in a corridor that previously handled hundreds of vessel movements each week.

The IRGC formally declared the strait closed on March 4, 2026, six days after the U.S. and Israel launched strikes on Iranian military infrastructure and killed Supreme Leader Ali Khamenei. Since then, the U.K. Maritime Trade Operations Centre has recorded more than a dozen attacks on commercial vessels, killing at least five crew members across two ships.

Iran has since added naval mines to the mix. Intelligence sources told CNN that while mining is not yet extensive, Iran is believed to hold approximately 6,000 naval mines in reserve, a figure confirmed in a prior U.S. congressional report.

“Iran’s success in laying mines in the Strait has taken the crisis into a new dimension. With a material military campaign shift, Iran’s chokehold on the Strait will intensify.” — Ben Emons, FedWatch Advisors

The IEA’s Record Release and Why Markets Didn’t Care

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On March 11, the International Energy Agency announced that its 32 member countries had unanimously agreed to release 400 million barrels of crude from strategic reserves. The U.S. committed 172 million barrels from its Strategic Petroleum Reserve, the largest single national contribution. IEA Executive Director Fatih Birol called it “a major action” but was unambiguous about its limitations.

“The most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.” — Fatih Birol, IEA Executive Director

Markets agreed with the caveat and ignored the action. Brent crude climbed back above $100 a barrel within hours of the announcement, and closed at $100.46 on Thursday after Iran’s newly installed Supreme Leader Mojtaba Khamenei declared the strait would remain closed as a “tool of pressure.” It was Brent’s first close above $100 since August 2022.

Analysts from multiple institutions were blunt about why the reserve release fell flat. The strait’s closure is locking up an estimated 15 million barrels of crude and refined products per day, according to the IEA. The 400 million barrel release, distributed over 120 days, covers at best a quarter of that shortfall.

“Traders are now doing the math and realize that IEA drawdowns can at best only offset a fraction of the roughly 15 million barrels per day net supply loss of crude and refined products due to ongoing halt to most tanker transits of the Strait of Hormuz.” — Bob McNally, Rapidan Energy Group

Pentagon Says Navy Not Ready; Administration Sends Mixed Signals

The administration’s public posture on reopening the strait has been erratic. Energy Secretary Chris Wright told CNBC on Thursday that the U.S. Navy was “not ready” to escort oil tankers through the Strait of Hormuz. Hours later, Treasury Secretary Scott Bessent told Sky News that escorts would begin “as soon as militarily possible.” Earlier in the week, Wright had posted on social media that the Navy had already escorted a tanker through the strait, then deleted the post. The White House confirmed the claim was false.

Defense Secretary Pete Hegseth struck a more confident tone at a Pentagon briefing Friday, calling Iran’s actions “sheer desperation” and dismissing concerns about the strait’s ongoing closure.

“The only thing prohibiting transit in the straits right now is Iran shooting at shipping.” — Pete Hegseth, Secretary of Defense

But senior military officials have been far more cautious. Joint Chiefs Chairman Gen. Dan Caine acknowledged that Iran retains the ability to threaten both commercial and military vessels, describing the waterway as an Iranian “kill box.” Pentagon officials told the Wall Street Journal that Navy escorts are not currently feasible and would not happen until Iranian offensive capabilities were further degraded. A senior analyst told Fortune that the cost of escorting a single vessel would likely exceed the value of its cargo.

President Donald Trump has pushed a more optimistic line, urging ships to keep transiting the strait and telling reporters he expects “great safety” to return “very, very quickly.” Trump has also described the surge in oil prices as a “small price to pay” for defeating Iran. That framing sits uneasily with U.S. Energy Information Administration data showing average gasoline prices rising from $2.94 to $3.60 per gallon since the war began.

The Global Stakes

The disruption is not limited to crude oil. The IEA reported that global LNG supply has been reduced by 20% since the closure began, forcing higher-income economies in Asia to compete with Europe for available cargoes. Japan, which routes roughly 70% of its oil imports through the strait, began releasing national reserves this week. China, which receives approximately one-third of its crude via Hormuz, faces a structural supply gap that its existing reserves cannot easily bridge.

Gulf producers are not unaffected. Saudi Aramco has diverted oil to the Red Sea port of Yanbu via its East-West Crude Oil Pipeline, restoring roughly 70% of its usual shipments. But that route faces its own vulnerabilities, with Houthi forces in Yemen still capable of attacking Red Sea traffic. The UAE is routing crude via the Abu Dhabi Crude Oil Pipeline to Fujairah on the Arabian Sea, though combined bypass capacity across both pipelines falls short of what normally transits the strait by approximately 12 million barrels per day.

Meanwhile, Iran’s new supreme leader has signaled no intention of backing down.

“The tactic of closing the Strait of Hormuz must also continue to be used.” — Mojtaba Khamenei, Iran’s Supreme Leader

The IRGC went further, warning that any vessel linked to the U.S., Israel or their allies “will be considered a legitimate target” and predicting oil would hit $200 per barrel. The IEA’s own base case analysis concedes that if the closure persists beyond 90 days, reserves could be exhausted before the strait reopens and prices could surge toward $120 to $150 per barrel.

Energy analysts have compared the current disruption to the 1973 Arab oil embargo, calling it the most severe shock to global energy markets in more than 50 years. Whether the U.S. military can reopen the strait before strategic reserves run thin, whether Iran is willing to negotiate even while outgunned, and whether markets are already pricing in the worst, or still have further to fall, remains the central question for governments and traders alike.

If the IEA’s 400 million barrel release cannot move oil prices on its own, what combination of military progress and diplomatic engagement would actually be sufficient to restore the flow of energy through the world’s most indispensable waterway?

Sources

This report was compiled using information from CNBC, CNN, NPR, Al Jazeera, Fortune, and Foreign Policy, the Congressional Research Service report on the Iran conflict and Strait of Hormuz, the U.S. Energy Information Administration, and the International Energy Agency’s March 2026 Oil Market Report.

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