LAHORE: When the first bombs dropped over Iran just over a week ago, many people outside the realm of geopolitics had no idea how rapidly the conflict would impact their finances. The military escalation between the US, Israel, and Iran has swiftly triggered a global energy crisis.
The conflict intensified in late February after a series of strikes by US and Israeli forces on Iranian infrastructure that triggered a forceful response from Tehran. Iran’s Revolutionary Guard Corps (IRGC) began targeting tankers and vessels in and around the Strait of Hormuz, a critical shipping route that carries about 20 million barrels of oil and LNG daily (around 20% of the world’s energy supply).
Within days, insurers withdrew war‑risk coverage and major carriers halted shipping through the region, effectively grinding one of the world’s most important energy corridors to a near halt.
As a result, oil prices surged sharply. By March 7, Brent crude and WTI crude rose above $90 per barrel, increasing more than 25% within a week, one of the largest weekly spikes in years.
Within days of the crude price spike, ordinary consumers began feeling the effects at fuel pumps around the world.
In the United States, according to data from the American Automobile Association, the national average price for regular gasoline as of March 6 stood at $3.32 per gallon, up 11% from a week earlier and the highest since September 2024.
Diesel prices have jumped sharply worldwide. In the US, diesel hit $4.33 per gallon, rising 15% in a week, which is the highest since November 2023.
The UK also saw increases, with petrol at £136.53/L and diesel at £148.35/L, both reaching 16-month highs. Across Europe, prices are climbing too: Germany’s A-95 averages €1.96/L (up from ~€1.80 in February), France is around €1.82–€1.83/L, and Italy and Portugal have risen 6-10 cents in recent weeks.
Fuel prices across Europe have risen since February. Smaller markets like Belgium, Spain, the Baltic states, and Poland saw increases of 6-10 cents per litre.
Scandinavia remains expensive, with prices around €1.92 in Sweden, €1.98 in Denmark, €1.95 in Finland, €2.05 in Norway, while the Netherlands is the highest at €2.19 per litre. Outside the EU, Moldova’s gasoline is about 24.33 lei per litre, showing regional spillover effects.
Asia's Growing Pain
The shock has not spared Asia. In South Korea, gasoline prices climbed to 1,871.83 won per liter, up 178.94 won since Feb. 28, while diesel rose to 1,887.38 won per litre, prompting concerns about rising logistics and transportation costs.
The Philippines expects diesel to rise by over 20 pesos per liter and gasoline by more than 11 pesos. Thailand is preparing for a 15% hike in diesel prices, but has temporarily frozen prices. In India, the price of a 14.2-kg LPG cylinder has risen 7% to 913 rupees.
On March 6, Pakistan raised petrol and diesel prices by Rs55 per liter (about a 20% increase), triggering panic buying at fuel stations before the price increase took effect.
When traffic through the Strait of Hormuz chokepoint slows, global oil supply tightens, and prices rise quickly. While some developed nations have reserves, many developing economies feel the impact immediately, with fuel costs rising for consumers in cities like New York, London, Seoul, Manila, and Karachi.
The key question is whether this will be a short-term shock or the start of a deeper energy crisis.
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