2026 Iran war fuel crisis

2026 Iran war fuel crisis

The 2026 Iran war, including the closure of the Strait of Hormuz, has led to possibly the largest ever supply disruption in the global oil market. The impacts of the conflict include acute supply shortages and rises in the cost of fuel, leading to inflation, and heightened risks of stagflation and recession. The war has precipitated a major energy crisis and subsequently economic crisis for Europe, primarily through the suspension of Qatari liquefied natural gas (LNG) and the closure of the Strait of Hormuz. The rest of the world has been affected by panic buying and severe disruption to the distribution of petroleum, much of which is sourced from the Middle East and transits the Straits of Hormuz, the latter blockaded by Iran in early March 2026. The Philippines declared a state of emergency on 24 March due to a concurrent strike by transport workers, while other countries such as Zimbabwe, Pakistan, Bangladesh, Nigeria, and Vietnam face similar predicaments with severe shortages of fuel.

Overview

2026 Iran war fuel crisis

The 2026 Iran war caused immediate volatility in energy markets, with Brent crude oil prices surging 10–13% to around $80–82 per barrel by 2 March 2026. The conflict has caused the restriction of nearly all traffic through the Strait of Hormuz, leading to what the International Energy Agency has characterised as the "largest supply disruption in the history of the global oil market". The head of the IEA described the situation caused by the war as the "greatest global energy security challenge in history".

Iran's closure of the Strait of Hormuz disrupted 20% of global oil supplies and significant liquefied natural gas (LNG) volumes. Analysts have forecast that prices could reach $100 per barrel if disruptions persisted, potentially adding 0.8% to global inflation.

Exports from the region have been typically going to Asian countries, with China, India, Japan, and South Korea accounting for 75% of oil and 59% of LNG exports. However, Singapore and Taiwan depend more on Qatari LNG, while Pakistan and Bangladesh are more price sensitive.

QatarEnergy announced on 3 March that it was declaring Force Majeure on its contracts with buyers, and internal sources, according to Reuters, said that it would soon be shutting down gas liquefication, as LNG tankers could not leave the Gulf, and that restarting it would take weeks. These announcements caused increases in world gas prices, which analysts said was a part of the Iranian Government's plan to apply pressure on the world to stop the war. On 6 March, al-Kaabi warned that if the war continues, other Gulf energy producers may be forced to halt exports and declare Force Majeure, and that "this will bring down economies of the world". Also on 6 March, it was reported that according to satellite imagery analysis by both Bloomberg and the Energy Economics and Society Research Institute in Tokyo, that Ras Laffan, the main gas facility in Qatar, appears to have not been damaged before the "unprecedented shutdown" which sent fuel prices higher. The United States, buffered by domestic production, faced less direct impact but saw gasoline prices rise 5-10 cents per gallon daily. The British think tank The Food Policy Institute has warned of long-term increases in food prices due to disruption in fuel and fertilizer markets.

On 18 March, Iran hit Qatar's inactive Ras Laffan Industrial City LNG complex, causing a 17% reduction in Qatar's LNG production capacity. The damages from this attack would take 3-5 years to fix. Consequently, LNG spot prices in Asia increased by over 140 %.

The impacts of the conflict are similar to the 1970s energy crisis, including acute supply shortages, currency volatility, inflation, and heightened risks of stagflation and recession.

Countries such as Australia and India have more sufficient reserves but face challenges with panic buying. Economies most reliant on the strait for energy imports are in Asia, with Europe also viewing the strait as vital for its energy security. The initial disruption of petroleum is expected to affect Asia the most, but Europe is likely to be hit hard in the medium-to-long term, and the UK is expected to be the worst hit major economy.

As of 28 March, analysts fear that another hard oil crisis is unfolding that is expected to be very decisive to the global economy.

Effects and measures by region

Europe

The war has precipitated a second major energy crisis and subsequently economic crisis for Europe, primarily through the suspension of Qatari liquefied natural gas (LNG) and the closure of the Strait of Hormuz. The conflict coincided with historically low European gas storage levels—estimated at just 30% capacity following a harsh 2025–2026 winter—causing Dutch TTF gas benchmarks to nearly double to over €60/MWh by mid-March. On 26 March, the European Commission advised its member states to fill their gas storages early to avoid price spikes later in the year.

European natural gas prices nearly doubled after, on 2 March, the Qatari Ministry of Defense announced that two Iranian drones attacked Qatari gas facilities, followed closely by an announcement from QatarEnergy that all gas production in the country has been halted. This raised concerns over energy security and fertilizer costs. EU natural gas prices decreased again to a less-high €48/MWh on Wednesday 4 March.

Shipping disruption contributed to volatility in UK energy markets, with analysts warning that wholesale gas price increases could raise household energy bills and expose the country's reliance on global fuel markets. The situation also renewed political debate over the role of domestic production in the North Sea, including potential reforms to the UK's Energy Profits Levy (windfall tax) on oil and gas producers and the future of investment in the sector. However, analysts noted that additional drilling in the North Sea would be unlikely to significantly reduce UK energy bills in the short term, as most oil and gas produced there is sold on international markets at global prices. Iran conflicts also bolstered the necessity for renewable energy, as solar and wind power can reduce vulnerability to external supply and decentralized power generation that offers greater autonomy from global energy markets. With fluctuating oil prices, renewable energy has become significantly more cost-competitive. Shell plc's CEO warned that Europe could face shortages of fuel by April. British supermarket Asda also warned that it was already facing shortages of fuel at their fuel stations.

Australia

In mid-March, the state governments of Victoria and Tasmania made public transport free to all users, for differing fixed time periods. On 30 March 2026 the Australian Government under Prime Minister Anthony Albanese, after a meeting of National Cabinet, announced a National Fuel Security Plan, to coordinate responses across all states and territories of Australia. The four-stage plan specifies roles and responsibilities of governments and industry partners. At this point, the country was at level two, dubbed "Keeping Australia moving", after going through a preparation and planning phase. The federal government announced the cutting of fuel excise by 50%, along with a three-month pause on road user charges for trucks.

New Zealand

On 12 March the New Zealand Government released six days' worth of petroleum following a global directive by the International Energy Agency to release 400 million barrels of petrol in response to supply disruptions caused by the 2026 Iran war.

On 24 March the New Zealand Government announced that about 143,000 working families with children would receive a $50 tax credit to help with rising fuel costs from 7 April. Another 14,000 families were also expected to be eligible for a lower tax credit.

On 27 March the New Zealand Government released its four-level fuel alert level system in response to fuel shortages caused by the Iran conflict. That day the country was placed on the first phase, watchful, with the public advised to use fuel cautiously.

Other Pacific nations

Most governments of Pacific nations in Oceania, such as Samoa, Fiji, Vanuatu, and Papua New Guinea, had said publicly by the end of March that they have enough fuel to keep going for a few months; however, privately, some officials have expressed concerns about the future if oil deliveries to the region are halted owing to the war, and prices have gone up in all of these countries as well as Solomon Islands, Tonga, and Marshall Islands. Australian Foreign Minister Penny Wong and Minister for Pacific Island Affairs Pat Conroy have signalled their willingness to ensure that regional neighbours do not run out of fuel. The New Zealand Government is similarly doing what it can to help, particularly Polynesian nations.

Philippines

The Philippines declared a state of emergency on 24 March due to a concurrent strike by transport workers,

Africa

Many African countries are suffering from the fuel crisis too. Kenya sources all of its oil from the Middle East, and Uganda only had a few weeks' worth of stock. Saudi Arabia supplies most of South Africa's fuel. Nigeria is the continent's largest oil producer, but it does not have sufficient local refineries, so buys refined product from Europe.