The price of oil soared more than 10% on Thursday, as the International Energy Agency warned the U.S.-Israel war on Iran was "creating the largest supply disruption in the history of the global oil market."
The price of international Brent crude oil rose 9% to more than $100 per barrel, while U.S. crude oil climbed above $96.
Stocks tumbled on the ripple effects that the oil market disruption was causing. As of late afternoon trading, the S&P 500 was down more than 1.3%, the Nasdaq fell 1.6% and the Dow had slipped 670 points.
"This absolutely dwarfs what we saw in the Russia-Ukraine crisis," said Helima Croft, chief commodities strategist at RBC Capital Markets, in an interview with NBC News.
U.S. crude oil prices have now risen more than 40% since the start of the war, bringing retail gas prices along with them. Since March 1, gas prices have risen nearly 70 cents to hit $3.59 per gallon on Thursday, according to GasBuddy.
President Donald Trump appeared to downplay the impact that the rising cost of oil is having on consumers. “When oil prices go up, we make a lot of money,” he said Thursday in a post on Truth Social.
“BUT, of far greater interest and importance to me, as President, is stoping an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World,” he added.
Overnight, a key terminal for oil exports in Oman was reportedly evacuated after tankers anchored off the coast of Iraq were attacked. Iraq also suspended operations at its oil terminals. Officials in Saudi Arabia, Dubai and Kuwait also reported multiple strikes and drone sightings.
Iran’s new Supreme Leader also said Thursday that the Strait of Hormuz, a critical transit point for oil tankers, should be shut, according to state TV.
The ongoing attacks have deepened fears that the war with Iran will be a protracted conflict and the Strait of Hormuz will remain closed for the foreseeable future, potentially leading to an energy supply crisis.
"We have never had the most important waterway for energy effectively closed," Croft said.
“The Strait of Hormuz is the big one," said Croft, who began her career in Washington working for the U.S. intelligence community. "It's always what intelligence analysts, military planners have been concerned about."
The White House has repeatedly said that Trump is “prepared to provide U.S. Navy escorts” through the strait.
But on Thursday, Energy Secretary Chris Wright struck a different tone.“It’ll happen relatively soon but it can’t happen now,” Wright told CNBC, referring to naval escorts.
Treasury Secretary Scott Bessent told Sky News later on Thursday, "As soon as it is militarily possible, the U.S. Navy, perhaps with an international coalition, will be escorting vessels through."
In the face of deadly Iranian strikes on tanker ships and longer-term supply shortages, both major companies and oil reliant nations found themselves on unfamiliar territory this week.
India’s energy minister announced Thursday that his country, the world’s most populous, would be taking new steps to limit fuel usage by some businesses in an effort to ensure “there is no hoarding or black marketing” of oil and gas while supply is hampered by the war.
On the corporate side, the French oil company TotalEnergies, one of the world's top 10 oil producers, said Thursday that it was halting some operations in the region.
"Production has been shut down or is in the process of shutting down in Qatar, Iraq and UAE offshore, representing approximately 15% of our total output," the company said in a statement.
The decision followed a similar announcement Wednesday from SLB, formerly known as Schlumberger. One of the world's largest oilfield services and equipment companies, SLB said it was shutting down operations in “a few countries” in an effort to “safeguard personnel and facilities.” It did not identify the countries, but said the decision would negatively impact its revenues.
Typically, more than 20% of the world's daily energy supply transits the Strait of Hormuz, but ship traffic has fallen to "a trickle," the IEA said in its monthly oil market report. "In the absence of a rapid resumption of shipping flows, supply losses are set to increase."
White House press secretary Karoline Leavitt said the president was also considering whether to lift some requirements of the Jones Act, a century old statute which requires U.S. domestic fuel to be transported on U.S.-flagged ships.
On Wednesday, the 32 countries that are members of the IEA agreed to release 400 million barrels of oil. That did little to immediately send market prices lower, though.
The U.S. Energy Dept. said it would release 172 million barrels as part of that overall release, but these would not begin until next week and would take 120 days to complete.
And even then, those reserve supplies would not get to market immediately, Croft said.
"The longer this disruption goes on," the more releasing reserve oil supplies will be "really a band-aid. It’s not a cure for the problem."
Croft said there is only one solution to the current energy shortage.
"The only way this crisis abates is if there is some way that we can reopen the Strait of Hormuz," she said, "And give confidence to shipping companies that their tankers will not be attacked."
