The Iran war and Tehran’s partial closure of the Strait of Hormuz have driven a global energy crunch, sending prices skyrocketing as supply constricts and volatility scares investors. Governments around the world have tried different measures including emergency oil releases, fuel price caps, and demand controls to lower energy prices. But the reality is - prices will likely remain high until the strait reopens, and the war concludes.
February 28: U.S. and Israel launched military strikes against Iran, killing top government officials and targeting military facilities.
March 2: Iran began threatening shipping in the Strait of Hormuz, restricting shipping through the narrow sea passage connecting the Persian Gulf to the Arabian Sea.
About 20% of the world’s oil and liquified natural gas (LNG) transits through this strait.
Saudi Arabia, United Arab Emirates, Iran, Iraq, Kuwait, Qatar, and Bahrain export oil through this strait.
READ MORE: AAF VP Dr. Kevin Dayaratna: How Iran War Oil Crisis Teaches a Valuable Lesson.
March 18: Israel struck Iran’s South Pars gas field, which makes up 70% of the country’s gas production.
March 18-19: Iran struck Qatar’s Ras Laffan Industrial City, the nation’s main site for producing LNG. Iran also targeted Saudi Arabia, United Arab Emirates, and Kuwait. It also hit an Israel’s oil refinery with limited damages.
Beyond the major actions described above, Iranian attacks also damaged refineries in Saudi Arabia, Bahrain, and Kuwait, struck a UAE’s oil export hub and its Shah gas field, and disrupted other energy infrastructure across the region.
The United States bombed only military assets on Iran’s Kharg Island, which accounts for 90% of the nation’s crude oil exports.
TIMELINE: Trump Administration’s Response to Higher Oil Prices
March 5: The U.S. issued a temporary 30-day waiver to allow India to buy Russian oil.
March 11: The U.S. will release 172 million barrels of oil from the Strategic Petroleum Reserve, which would take four months to deliver to the market.
March 12: The U.S. temporarily allowed nations to buy sanctioned Russian oil already at sea for a month.
March 13: The Energy Department ordered a company to restore offshore oil and gas operations in California.
March 18: The Treasury Department allowed Petróleos de Venezuela S.A., the state-owned oil and gas company, to directly sell oil to the U.S.
March 18: The Trump administration temporarily waived the Jones Act, which requires ships transporting cargo like crude oil from one American port to another to be mostly U.S. built, owned, crewed, and flagged.
March 20: The Treasury Department temporarily allowed the purchase of sanctioned Iranian oil already at sea.
March 20: Georgia temporarily paused its gasoline and diesel tax for sixty days.
March 25: The Environmental Protection Agency will temporarily allow E15 (gasoline blended with 15% ethanol) from May 1 to May 20.
E15 is cheaper than the common E10.
How Are Other Countries Responding to Higher Fuel Prices?
Nations have tried increasing oil supply:
The International Energy Agency’s 32 member nations will release 400 million barrels of oil from their reserves.
Saudi Arabia rerouted oil exports to the Red Sea.
Meanwhile, Iran allowed ships from China, Russia, India, Iraq, and Pakistan to safely transit the Strait of Hormuz.
Some countries implemented price controls:
For instance, South Korea temporarily imposed price caps on gasoline and diesel to not surpass about $4.40 per gallon.
Japan, Hungary, and Greece took similar measures.
Italy, Austria, and Brazil temporarily cut taxes on fuel to lower prices.
China, Thailand, and Serbia temporarily banned fuel exports to prevent domestic shortages.
Some nations artificially reduced demand:
For example, Sri Lanka designated every Wednesday a public holiday and implemented fuel rationing.
The Philippines enacted a four-day work week for government employees.
Looking Ahead
The Trump administration is trying to strike a balance between national security priorities and energy policy objectives.
President Trump recently postponed military strikes on Iranian power plants and energy infrastructure for five days after diplomatic talks between Washington and Tehran.
So far, measures have had a limited impact on taming oil prices.
REALITY CHECK: Energy prices are likely to remain high until the war ends, and the Strait of Hormuz reopens.
Bottom Line
As with all wars, energy supply and prices are unpredictable. But one thing is clear: countries should increase domestic production of energy to reduce vulnerability in future conflicts.
