Oil Hits $112/Barrel as Iran Keeps Hormuz Closed: What It Means for Gas Prices, Your 401(k), and the Global Economy

Brent crude closed at $112.57 per barrel on Friday — the highest price since July 2022 — after Iran's Revolutionary Guard Corps formally declared the Strait of Hormuz closed following 27 days of US-Israeli military strikes. The move sent ripples through every market that touches energy, from gasoline stations in the American Midwest to the balance sheets of airlines, shipping companies, chemical manufacturers, and central banks from London to Tokyo.

The Strait of Hormuz is a geographic chokepoint through which approximately 20% of the world's total oil supply passes each day — roughly 21 million barrels. That includes crude from Saudi Arabia, the UAE, Kuwait, Iraq, and Qatar. Iran's closure forced those Gulf producers to collectively reduce output or divert shipments around the Cape of Good Hope, adding 7-10 days and $2-4 million in additional fuel costs per supertanker voyage. The practical effect on daily global supply has been equivalent to removing the entire production capacity of Iraq from the market.