The furnaces at Vaikunth Dham, the largest crematorium in Maharashtra, India, fell silent for lack of liquefied petroleum (natural) gas. Operatives had fuel for only a few more services. After that, the dead would be cremated with electricity or wood — a small, grim administrative shift thousands of miles from any battlefield, but one that shows how deeply the war with Iran and the effective closure of the Strait of Hormuz can ripple through the world.

Since US and Israeli strikes on Iran on February 28, the narrow waterway that links the Persian Gulf to the open ocean has become the epicentre of the worst disruption to global energy markets in half a century. At its narrowest the strait is just 21 miles wide. Its two shipping lanes normally carry around 20 million barrels of oil per day — roughly a fifth of seaborne oil trade — plus large volumes of LNG. That traffic has collapsed to a trickle: exports of crude and refined products now sit at under 10% of pre-conflict levels.

The result has been chaos. Brent crude, near $72 a barrel before the war, surged above $100 within days and peaked at $126 — the highest since 2008. Prices have since swung violently; on March 23 they plunged more than 11% after an announcement of “productive conversations” with Tehran, before recovering some losses. At this stage volatility matters as much as absolute levels. When the world’s most critical energy chokepoint is effectively hostage, every strike, tweet, and insurance decision becomes a market-moving event.

The blockade that never was

The irony of the Hormuz crisis is what Iran did not do. There was no formal naval blockade, no widespread use of underwater mines at first, and no continuous line of warships physically blocking passage. Instead, Iran created a de facto closure through asymmetric tactics and relatively inexpensive weapons: drones.

A few cheap-to-mid-range drone strikes on transiting vessels were enough. Insurers pulled coverage, shipping firms refused to send crews into what had become, for practical purposes, a war zone, and many tankers rerouted or stayed idle. Ships that attempted passage were sometimes intercepted by speedboats and boarding parties and redirected to Iranian ports. Some 3,200 ships remain trapped inside the Persian Gulf.

Iran has since hardened its stance, declaring the strait closed to US, Israeli, and Western-allied shipping. Yet Tehran has continued to move oil — at least 11.7 million barrels have passed through since the conflict began, largely bound for China, often on vessels with their tracking turned off. In a twist, the US temporarily lifted some oil sanctions on Iran to steady markets even as it bombs the country. Iran reopened its Jask terminal on the Gulf of Oman, signaling the strait is closed to most but not to its customers.

Impacts far and wide

The immediate price shock was severe, but the structural damage is deeper. Oil markets are global; a disruption of this size cannot be contained. Gulf producers are filling local storage and cutting production because wells and associated infrastructure cannot be shut and restarted like a simple faucet. The longer the strait remains inaccessible, the longer recovery will take, meaning aftershocks could persist for months or years even if passage resumes.

Refining capacity is another bottleneck. Much like pandemic-era supply-chain problems, refineries cannot rapidly scale output once the conflict ends. Over 3 million barrels per day of Gulf refining capacity have gone offline — partly from strikes, partly because there’s nowhere to send output. Damage to LNG infrastructure could take years to repair: QatarEnergy’s CEO warned that an attack on Qatar’s LNG facilities could need three to five years to fix.

LNG supply has already been tight since Russia’s invasion of Ukraine. With roughly 20% of LNG flows reduced, Asian and European buyers are bidding hard for remaining cargoes. The crunch is global: South Korea imposed a fuel price cap after gasoline spiked in Seoul; India faced panic buying of cooking-gas cylinders, prompting raids and seizures under the Essential Commodities Act and a surge in induction cooktop sales; Australia sees an unfolding domestic fuel squeeze due to limited reserves and refining capacity. In the US, crude prices rose more than 30% since the war began and national average gasoline prices climbed by about $0.50 a gallon. Remove a fifth of global supply and, with demand intact, prices rise everywhere.

Up, down and all around

On March 11 the International Energy Agency announced the largest coordinated release of emergency reserves in its history: 400 million barrels, more than double the release after Russia’s 2022 invasion of Ukraine. The US pledged 172 million barrels from its Strategic Petroleum Reserve, to be delivered over 120 days; Japan, Germany, Austria, South Korea, Turkey, and the UK also tapped reserves.

The market’s reaction was short-lived. Prices dipped briefly but climbed back above $90. Analysts noted 400 million barrels equals roughly four days of global production and only 16 days of the volume that typically transits the Gulf — not much in the face of a sustained closure. Alternative pipelines, such as Saudi Arabia’s East-West line, can reroute some flows but lack the capacity to replace full strait traffic and are themselves vulnerable to drone and missile attack. Strategic reserves and workarounds are palliatives, not cures: restoring access through Hormuz is the only true substitute.

The ghost of 1973

Comparisons to the 1973 oil embargo are common and apt. Then, Arab OPEC members cut exports to the US over its support for Israel, and prices quadrupled, ushering in stagflation and spawning the IEA. Current models suggest severe economic consequences: the Dallas Fed estimates that a single-quarter closure of the strait would push WTI to an average of $98 per barrel and shave annualized global GDP growth by 2.9 percentage points. A three-quarter disruption would deepen cumulative losses. In some ways 2026 may be worse: the present disruption stems from active warfare, not a coordinated embargo, and physical infrastructure is being damaged while shipping lanes are contested by drones and missiles. Unpredictability is the defining feature.

Goldman Sachs warned that if transit stays at 5% of normal for ten weeks, daily Brent could exceed its 2008 record of $147 per barrel. Headlines and market swings follow every tactical shift; a temporary pause on strikes once sent prices down briefly, but the trajectory remains fragile.

Looking forward

The situation is fluid. A pause on attacks can calm markets temporarily, but Iran’s new Supreme Leader has vowed to continue blocking the strait. Corporations have set informal timelines: if Hormuz does not reopen within roughly two weeks, many will start planning for a crisis extending into mid-year.

Two lessons stand out. First, the vulnerability of the Strait of Hormuz was long known. It has been war-gamed and modeled for decades, yet when crisis arrived neither the US nor Israel had evidently mitigated the scale of disruption. The world built energy systems around a 21-mile bottleneck and was then surprised when it was attacked.

Second, the countries that had diversified energy supplies are better insulated. China, after years of expanding wind and solar, now has more renewable generation on its grid than fossil-fuel capacity for the first time. Pakistan, burned by the price shocks of 2022, invested heavily in household and commercial solar and is now among the world’s largest solar markets. The pattern is clear: exposure to global commodity markets is a perpetual risk, and diversification remains the most reliable hedge.

For now the world watches the Strait. In Pune, Vaikunth Dham’s electric furnaces keep operating — a small adjustment born of necessity in a crisis whose full consequences have yet to play out.

This article first appeared in the Pickle Gazette and is republished with permission.

The furnaces at Vaikunth Dham, the largest crematorium in Maharashtra, India, have gone quiet. Operators had only enough liquified petroleum gas (LPG) for a few more cremations; after that, the dead would be cremated by electricity or wood. This small, grim administrative choice shows how far the shockwaves from the war in Iran and the effective closure of the Strait of Hormuz can reach.

Since the United States and Israel launched strikes on Iran on February 28, the narrow waterway linking the Persian Gulf to the open ocean has become the epicentre of the biggest disruption to global energy markets in decades. At its narrowest the strait is 21 miles (33 km) wide. Its two lanes normally carry about 20 million barrels of oil per day—roughly a fifth of the world’s seaborne oil trade—plus huge volumes of LNG. That traffic has collapsed to a trickle: exports of crude and refined products are under 10% of pre-conflict levels.

The result has been chaotic. Brent crude, near $72 a barrel before the war, surged past $100 within days and peaked at $126 (the highest since 2008). Prices then swung violently: on March 23 they fell more than 11% after US President Trump announced “productive conversations” with Tehran, before recovering some losses. At this stage volatility matters as much as absolute price—the world’s key chokepoint being contested means every strike, tweet, or insurance decision moves markets.

The irony is what Iran did not do. There was no formal naval blockade or extensive mine-laying—at least not initially. Instead Tehran achieved a de facto closure using asymmetric tools: drone strikes and harassment. A handful of attacks on vessels transiting the strait spooked insurers and shipping companies, who withdrew cover and crews, treating the waterway as a war zone. Ships that tried to pass were met by speedboats and boarding teams; many were redirected to Iranian ports. Some 3,200 ships are currently trapped inside the Persian Gulf.

Yet Iran has continued to move oil—to China in particular. At least 11.7 million barrels have transited the strait since the conflict began, often on vessels running dark (with tracking systems off). In a further twist, the US temporarily relaxed oil sanctions on Iran to steady markets even while conducting strikes. Tehran reopened its Jask terminal on the Gulf of Oman as an alternative export route, signaling the Strait is closed to most but not to Iran’s customers.

The immediate price shock is obvious; the deeper problem is structural. Gulf producers face filling local storage and forced production cuts. Shutting wells is costly and risks damage, so the longer the closure persists, the longer recovery will take—meaning market aftershocks could last months or years. Refining capacity is another bottleneck: over 3 million barrels per day of Gulf refining capacity is already offline, partly from strikes and partly because there’s nowhere to send crude. Repairing damage—QatarEnergy warned an attack on its LNG infrastructure could take three to five years to fix—adds to the long tail.

Global LNG supply is also strained. Since Russia’s invasion of Ukraine, LNG demand rose; with supply cut by roughly 20%, Asian and European buyers are bidding fiercely for remaining cargoes. The crunch is tangible: South Korea imposed a fuel price cap after Seoul’s gasoline breached 1,900 won per litre. In India panic buying of cooking gas cylinders prompted government raids and seizures; induction cooktop sales on Amazon India surged thirtyfold. Australia faces an emerging fuel crisis because of limited reserves and refining capacity. The US is not immune: domestic crude prices are up more than 30% since the war began and retail gasoline averages around US$3.57 per gallon.

Governments responded. On March 11 the IEA announced the largest coordinated strategic reserve release in its 50-year history: 400 million barrels—more than double the 2022 release after Russia’s invasion of Ukraine. The US pledged 172 million barrels from its Strategic Petroleum Reserve over 120 days; Japan, Germany, Austria, South Korea, Turkey, and the UK contributed too. The market briefly eased but prices soon rose again above $90: 400 million barrels equals roughly four days of global production and 16 days of the volume normally transiting the Gulf, inadequate to replace a blocked strait. Alternative pipelines, like Saudi Arabia’s East-West line, help partially but can’t substitute fully—and have likely become targets themselves.

Comparisons to the 1973 oil embargo are common and apt. Then, Arab OPEC members halted exports to the US and prices quadrupled, triggering stagflation and reshaping geopolitics. A Dallas Fed model suggests that a one-quarter closure of the Strait could push WTI to an average of $98 per barrel and shave 2.9 percentage points off annualized global GDP growth; a three-quarter disruption would deepen losses further. Today’s disruption differs: it’s a byproduct of active warfare that destroys infrastructure, contests shipping lanes with drones and missiles, and leaves availability subject to leaders’ decisions—making the situation far more unpredictable. Goldman Sachs warned that if Hormuz flows stay at 5% of normal for ten weeks, daily Brent could exceed the 2008 record of $147 per barrel.

The outlook is fluid. A US pause on strikes against Iranian power infrastructure briefly lowered prices, but Iran’s new Supreme Leader, Mojtaba Khamenei, vowed to continue blocking the strait. Corporations have set informal deadlines—about two weeks—for reopening before planning for a protracted mid-year crisis. Two lessons stand out. First, Hormuz’s vulnerability was not a secret; it had been war-gamed and modeled for decades, yet planning and preparedness fell short when the moment arrived. The world built an energy system around a 21-mile bottleneck and was undone when that bottleneck was targeted.

Second, countries that prepared fare better. China has expanded wind and solar to the point that renewable capacity on its grid now exceeds fossil fuel capacity. Pakistan, burned by 2022 price shocks, invested heavily in household and commercial solar and is now a leading solar market. These shifts don’t eliminate pain, but they provide insulation. The observable pattern: exposure to global commodity markets is an enduring risk and diversification—especially into renewables—is the most reliable hedge.

For now the world watches the Strait and waits. In Pune, Vaikunth Dham’s electric furnaces continue to serve the city’s dead—an adjustment born of necessity, in a crisis whose full consequences have yet to unfold. This article first appeared in the Pickle Gazette from The Geopolitical Pickle and is republished with permission.