Crude oil prices surged above $120 per barrel for the first time in over fifteen years on April 3, 2026 as multiple reports indicated U.S. and allied naval forces would extend the de facto blockade of Iranian-controlled portions of the Strait of Hormuz for at least an additional 30 days. Brent reached $123 in early trading; WTI peaked above $120.

The blockade extension reports came from briefings by U.S. Central Command and were accompanied by Treasury Secretary Bessent confirming that secondary sanctions on entities facilitating Iranian crude exports would be enforced with maximum strictness. The combined message reset the market's expectation that the disruption would resolve quickly.

The reaction in physical markets was sharp. War-risk insurance premiums for tanker transit through the strait climbed to eight times pre-crisis levels, with multiple Tier-1 carriers including Maersk, MSC, CMA CGM, and Hapag-Lloyd announcing additional vessel rerouting. Around 1,550 commercial vessels were stranded in or around the strait with approximately 22,500 mariners trapped, according to Joint Chiefs reporting.

Asian refiners — particularly in Japan, South Korea, and India — moved aggressively to secure alternative crude supplies from West African and Atlantic Basin sources, putting upward pressure on light sweet crude differentials. Indian refiners reportedly paid premiums of $4-$6 per barrel above Brent for delivery in the May-June window.

The structural supply disruption affected refined products as well. RBOB gasoline futures rose 18 cents to over $4.20 per gallon, foreshadowing the climb in AAA national retail gas averages that would eventually reach a national average of $4.515 by mid-May. Heating oil futures climbed correspondingly.

EIA's Weekly Petroleum Status Report later confirmed the demand-side effects: U.S. crude oil imports fell by 387,000 bpd as Persian Gulf supply was unavailable and Atlantic Basin alternatives commanded premium pricing. Refinery utilization climbed to 91.7% as operators ran available crude harder to compensate for tighter international product flows.

Continuing coverage: Oil Prices · Geopolitics · Iran.