Weeks In: What Has Changed at the Strait of Hormuz, and What Hasn’t

MARCH 24, 2026

A record reserve release. A Fed on hold. Gas prices at a four-year high. And a weekend whipsaw in oil markets that captures just how unstable this moment remains.

Over the weekend, after President Trump issued a 48-hour ultimatum to Iran to reopen the Strait of Hormuz or face strikes on its power plants, Brent crude — the global oil benchmark — climbed above $114 a barrel at Sunday’s open, its highest level since 2022. By the time U.S. markets opened Monday morning, Trump had already posted on Truth Social that the two countries had held “very good and productive conversations” and that he was postponing the threatened strikes for five days. Oil tumbled as much as 13 percent on the day, with Brent closing just below $100 for the first time in nearly two weeks. By Tuesday morning, prices had rebounded above $101 as overnight fighting between Israel and Iran continued and Iran denied that any talks were underway. This is the market we are now living in: enormous daily swings, driven by a conflict that has shown no consistent trajectory in either direction.

When I wrote about this crisis on March 9, oil was approaching $120 and G7 finance ministers had just convened an emergency call without reaching a deal. A lot has happened in the four weeks since. Some of it matters. Most of the underlying problem remains unchanged.

The Reserve Release: Record-Breaking, and Not Enough

The G7 did reach an agreement, and the IEA acted on it. On March 11, IEA member countries unanimously agreed to release 400 million barrels of oil from strategic stockpiles, the largest emergency intervention in the agency’s 52-year history, more than double the 182 million barrels released after Russia’s invasion of Ukraine. “The oil market challenges we are facing are unprecedented in scale,” IEA Executive Director Fatih Birol said in announcing the decision. “I can now announce that IEA countries have unanimously decided to launch the largest-ever release of emergency oil stocks in our agency’s history.”

The announcement provided temporary relief. Prices pulled back from their peaks in mid-March. But analysts had warned ahead of the release that even the IEA’s maximum drawdown capability would likely not offset the nearly 20 million barrels per day that typically transits through the Strait. That warning has proved correct. Birol said Monday that the IEA was consulting governments on releasing more oil “if necessary,” while stressing that the most important solution would be opening the Strait. Strategic reserves remain a pressure valve, not a fix.

The Strait: Selectively Closed, Not Fully Open

The picture at the Strait itself is more complicated than a simple open-or-closed binary. Only about 21 tankers transited the route in the first two weeks of the conflict, compared with more than 100 daily vessel movements before the war. Iran has effectively created a selective corridor: its own oil continues to move, Iranian-linked and Chinese-flagged vessels have transited with apparent tolerance, and a small number of Indian and Pakistani ships have passed through following diplomatic negotiations.

What has not resumed is anything approaching normal commercial traffic. Iran has made more than 20 confirmed attacks on merchant ships since the conflict began, and war-risk insurance for the corridor remains functionally unavailable for most operators. As one analyst put it, the Strait is “better understood as closed selectively against some traffic, while still functioning for Iranian exports and a narrow set of tolerated non-Iranian movements”. The roughly 400 vessels anchored in the Gulf of Oman waiting for conditions to change tells the real story.

What Americans Are Paying Now

The numbers at the pump have moved significantly and are now the clearest visible signal of the crisis for most American households. The national average for regular gasoline reached $3.96 on Monday, its highest level since August 2022, up $1.02 per gallon, or 34 percent, in a single month. That one-month increase is larger than what followed Hurricane Katrina in 2005 or the Russian invasion of Ukraine in 2022. Diesel has climbed to $5.25 nationally according to AAA data as of Sunday, its highest level since 2022, up from $3.76 before the war began.

Diesel matters in ways that don’t show up immediately in headline inflation figures. Tractor-trailers, trains, and most ships rely on diesel, meaning the price of bringing virtually all goods to market has risen markedly in a matter of weeks. That won’t result in immediate price increases at the store, but it will shape the pricing decisions companies make in the weeks ahead, especially for heavy, bulky goods for which transportation is a large share of total cost. A New Hampshire firewood business owner told Bloomberg his monthly diesel bill had jumped from roughly $6,800 to $11,000. That cost has to go somewhere.

The Federal Reserve Is Watching and Waiting

The Federal Reserve held its benchmark interest rate steady at 3.5 to 3.75 percent at its March 17-18 meeting, a decision that was widely expected. What the meeting revealed about the Fed’s thinking matters more than the rate decision itself. The Fed’s updated projections raised the 2026 inflation forecast to 2.7 percent, up from 2.5 percent, and the Fed’s rate projection chart — known as the dot plot — now points to just one rate cut in 2026. Markets, for their part, are pricing in no more than one cut all year.

“Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East,” Chair Jerome Powell said at his post-meeting press conference. He added that “in the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects.” The Fed is not sounding the alarm, but it is not cutting rates either, and the bar for doing so has visibly risen. The rate relief that many households and businesses were expecting to arrive in 2026 is now in serious doubt.

For households carrying credit card balances or variable-rate auto loans, a rate hold means borrowing costs stay where they are — elevated. The average APR for credit card accounts accruing interest stood at 22.30 percent in the fourth quarter of 2025, according to Federal Reserve data, and with the Fed now signaling only one cut before year-end, that figure is unlikely to fall meaningfully for most borrowers.

The Five-Day Pause and What It May, or May Not, Mean

Trump’s announcement Monday that he was postponing strikes on Iranian power plants and that “productive conversations” were underway sent markets into one of their sharpest single-day moves on record. Brent crude tumbled as much as 13 percent and U.S. stock futures surged within minutes of the Truth Social post. By Tuesday morning, much of that optimism had unwound. Iran denied any formal talks were taking place. Israeli strikes on Tehran continued overnight. Brent had climbed back above $101.

Whether the pause reflects genuine back-channel diplomacy or is a tactical maneuver to avoid a confrontation Iran is not prepared for, the market is pricing in uncertainty rather than resolution — which is itself a meaningful signal. A conflict that can move crude prices by 13 percent in a single day based on a social media post has not stabilized. It has just paused.

This pattern has repeated itself several times over the past four weeks: a statement or signal suggesting de-escalation, a sharp price move, then a return toward prior levels as the underlying conflict persists. Goldman Sachs, whose commodities research team has significant exposure to energy markets, now expects Brent crude to average $110 in March and April, and has warned that if Hormuz flows remain at 5 percent of normal for 10 weeks, daily prices will likely exceed their 2008 record. That scenario is not inevitable. But a five-day military pause, with Israel still actively striking Iran and Tehran still controlling the Strait, is not a resolution.

The pattern I described in my original piece on this crisis, that the full economic consequences of an oil supply shock arrive gradually rather than all at once, is now clearly visible. Research I co-authored in 2022, published in Energy Economics, found that a 30 percent surge in crude translates to only about an 11 percent rise in retail gasoline prices in the short run, with the full impact accumulating over subsequent months. We are now entering that accumulation phase. Grocery prices will reflect higher transport and fertilizer costs later this spring. Freight rates are working their way into consumer goods. The Federal Reserve’s updated inflation projections were made before this weekend’s market convulsions. They should be treated as a floor, not a ceiling.

For American consumers, the next several weeks turn on a question that has no clear answer yet: whether Trump’s five-day pause leads to something durable, or whether it is one more oscillation in a conflict that, by most accounts, its architects did not fully anticipate and do not fully control.