Geopolitical conflict in the Strait of Hormuz is severely disrupting global oil flows, pushing prices to a 19.5-month high. The disruption directly pressures BRICS nations’ energy security and complicates their broader agenda to de-dollarize oil trade and financial systems amidst ongoing regional hostilities and infrastructure attacks.
A U.S.-Israeli military offensive against Iran has closed the Strait of Hormuz, a passage for roughly one-fifth of the world’s oil. This pushed April WTI crude to close up $6.35 on March 5, reaching a 19.5-month high as gasoline prices also surged.
The strait’s closure has left Gulf oil with limited export options, forcing countries like Iraq and Saudi Arabia to cut production. Data from Kayrros indicated key Saudi terminals like Ras Tanura and Ju’aymah were rapidly running out of storage capacity.
Iran’s Islamic Revolutionary Guard Corps warned ships they “could be at risk from missiles or rogue drones.” An Iranian drone caused a major fire at the UAE’s Fujairah oil hub, while separate attacks forced Saudi Arabia to shut its 550,000-barrel-per-day Ras Tanura refinery.
Goldman Sachs placed the real-time risk premium for crude at $18 per barrel, estimating the cost of a six-week halt to tanker traffic. China responded by instructing its largest refiner to suspend exports of diesel and gasoline, a move applying further upward pressure on global prices.
U.S. Defense Secretary Pete Hegseth described the offensive as “death and destruction from the sky all day long.” The Guardian reports the conflict has killed over 1,000 civilians, with Israel signaling weeks more of combat ahead.
The crisis tests BRICS de-dollarization plans as the bloc’s oil trade navigates contested corridors. Commentator Wang Tao stated in a recent interview that “It is equally important to quickly decouple from the SWIFT system,” highlighting the BRICS Pay initiative.
Despite OPEC+ pledging to add 206,000 barrels per day in April, the supply is being absorbed by the disruption. Data from Vortexa shows approximately 290 million barrels of Russian and Iranian crude are in floating storage, over 50% more than a year ago.
