The Strait of Hormuz, handling 50% of global sulphur trade and 34% of crude oil shipments, has effectively closed since an assault on Iran on February 28, 2026. Tanker traffic dropped from roughly 60 vessels daily to near zero after March 5, creating the largest oil supply disruption since the 1970s Arab embargo. The World Bank reports an initial loss of 10.1 million barrels per day in March.

The price impact has been severe. Oil jumped $46 per barrel in March alone—the biggest monthly rise in the 2000s—while Singapore jet fuel prices doubled and urea rose 85%. Even with replacements from other OPEC producers, pipelines and inventories, a 4.6 million barrel per day shortfall remains. The bank forecasts energy prices up 24% this year, with urea rising 60% and potential oil averages reaching $115 per barrel if disruption continues.

Central banks face a difficult balancing act as inflation pressures mount. The World Bank expects food prices to rise only 2% this year due to large stocks, but warns 2027 could be worse if the blockade persists. Trump and Iran both have incentives to end the conflict—their economies and allies need it—but the timeline for resolution remains uncertain.