Oil once again dictates market sentiment
The price of oil is once again at the centre of the global economic story, and not only because of stock market charts, but because of the very concrete fear that the war conflict in the Middle East could spill over into one of the most important energy chokepoints in the world. After strikes linked to the widening conflict between Iran, the United States and Israel, markets entered a phase of nervousness in which every new piece of news about shipping security, production disruptions or attacks on infrastructure is a sufficient signal for prices to rise. In such circumstances, oil is no longer just a commodity followed by energy traders, but an indicator of broader economic risk that quickly spills over into industry, transport, household budgets and inflation expectations. That is precisely why the question of the price of a barrel today is no longer a narrow market issue, but a topic that concerns almost every economy that depends on energy imports or global trade.
The Strait of Hormuz as a key point of global energy
At the centre of the current concern is the Strait of Hormuz, a narrow maritime passage between the Persian Gulf and the Gulf of Oman, through which a huge share of global trade in oil and liquefied natural gas passes. According to data from the International Energy Agency, during 2025 an average of around 20 million barrels of oil and petroleum products per day passed through that strait, or approximately a quarter of the world’s seaborne oil trade. The U.S. Energy Information Administration further states that flows through Hormuz in 2024 and the first quarter of 2025 accounted for more than a quarter of total global seaborne oil trade and around a fifth of total global consumption of oil and petroleum products. Translated into everyday economic language, any more serious disruption on that route immediately raises the question of supply for Asian economies, but also for a whole շարք of European and other importers that do not necessarily buy exclusively Gulf oil, but pay the price according to the global market standard.
The problem is not only in the sheer volume passing through that corridor, but also in the fact that alternatives have very limited capacity. The IEA warns that Saudi Arabia and the United Arab Emirates have certain export routes that bypass Hormuz, but they cannot fully compensate for the loss of passage. The agency’s estimates say that only part of exports can be redirected via alternative routes, approximately between 3.5 and 5.5 million barrels per day. This is important because it shows that in the event of a longer disruption the market would face not only a short-term logistical delay, but a real shortfall in deliveries and a rise in the risk premium. An additional problem is that a more serious interruption of transit would also hit the liquefied gas market, since Qatar and the United Arab Emirates also direct a significant share of LNG exports precisely through that route.
The market reacts faster than politics
Financial markets as a rule do not wait for official confirmation of a full crisis before reacting. It is enough for there to be an assessment that the risk could escalate for the price of crude oil to start moving sharply upward. At the beginning of March 2026, the price of Brent once again jumped above 90 dollars per barrel, after being significantly lower only a few days earlier. This shows how quickly a geopolitical event can reverse expectations that until recently pointed to relatively comfortable supply and rising global inventories. In its short-term outlook, the U.S. Energy Information Administration had still highlighted that in 2026 and 2027 global production should grow faster than consumption, with inventories continuing to increase. But in moments of crisis the market temporarily ignores medium-term balances and focuses on the immediate risk: will tankers pass, will producers have to reduce exports, and will insurance and transport become so expensive that even physically available oil becomes more expensive or harder to access.
That is the reason why the oil market often acts as a seismograph of political instability. Every signal about an attack on infrastructure, a suspension of navigation, the shutdown of part of production or danger to tanker crews enters the price almost instantly. In the current circumstances, fear is not tied only to Iran and neighbouring producers, but also to the wider logistical chain that includes shippers, insurers, ports and refineries. Even when there is formally no complete blockade, it is enough for a large number of shippers to assess the passage as unsafe for the actual flow of goods to slow sharply. For the market, this creates the same effect as a physical reduction in supply: rising prices and increased uncertainty.
Why more expensive oil also hits those who do not buy oil from the Gulf
One of the most common misconceptions in public is that disruptions in the Persian Gulf directly affect only the states that buy crude oil there. In reality, the global energy market functions in such a way that the price of benchmark oil grades, above all Brent, becomes the starting point for a far wider circle of contracts, derivatives and costs. When a geopolitical shock pushes Brent higher, diesel, petrol, jet fuel, heating oil and part of petrochemical products become more expensive. The cost of transporting goods rises, and then that increase moves into the food sector, construction, logistics, public utilities and manufacturing. In the European context, this means additional pressure on economies that had only just begun to adapt to the post-pandemic and inflationary shocks of previous years.
In its projections during 2025, the European Central Bank warned that lower energy assumptions were one of the reasons why inflation forecasts for 2025 and 2026 were revised downward. A reversal of that trend, therefore a new increase in the price of energy, could once again push inflation expectations upward, even if there is no prolonged physical shortage of oil. In other words, uncertainty itself has its price. Households feel it at petrol stations and in bills, carriers in operating costs, and industry in inputs and margins. States that depend on tourism and road transport, as well as companies from the distribution and manufacturing sectors, are especially sensitive to such shocks because more expensive energy quickly reduces room for keeping prices stable and for investment predictability.
What is currently happening in the Middle East
According to available information from international agencies and energy institutions, the current wave of price growth is linked to the widening of the conflict that at the end of February turned into a more open regional confrontation. The Associated Press states that the war between Iran, the U.S. and Israel began on 28 February 2026, and that attacks and damage were then reported in several Gulf states, including locations connected with port, energy and water infrastructure. In a special thematic review published last week, the International Energy Agency stated that disruption to energy flows through the Strait of Hormuz has already forced some operators to begin cutting production, while production of refined products and liquefied natural gas in the region has also been significantly affected. Such wording is especially important because it comes from an institution that otherwise communicates actual market disruptions very cautiously.
In other words, the market is no longer reacting only to the possibility of risk, but also to the first signs of a real operational hit. When operators begin shutting down part of their capacity because exports cannot flow smoothly, the problem ceases to be only psychological. Then the classic energy equation takes over: less available goods, more expensive transport, a higher insurance premium and stronger pressure from buyers to secure alternative deliveries. It is precisely at that stage that the broader economic effect arises, because the entire chain from tanker to end consumer begins adapting to the scenario of more expensive and more unstable energy. Capital markets in such moments also react selectively: energy companies may profit in the short term, while transport, aviation, the chemical industry and part of the manufacturing sector feel pressure due to higher input costs.
Impact on Europe and Croatia
Although Europe does not receive the largest share of crude oil that passes through the Strait of Hormuz, the European economy is not isolated from such shocks. The IEA states that Europe receives a relatively small share of the crude oil that passes that route, around 4 percent of regional flows, but that does not mean it is spared. The price of oil is formed on the global market, and European importers buy under conditions determined by the overall balance of supply and demand, including geopolitical risk. In addition, Europe is also sensitive to the LNG market. If there is disruption to Qatari exports or a sudden redirection of cargoes toward Asia, European buyers may face higher gas prices and greater competition for available shipments, especially during periods when inventories are being replenished.
For Croatia, such a development means above all the risk of spillover into fuel prices, transport and a range of goods whose production or delivery depends on energy. In European Union member states, regulatory and tax mechanisms can in the short term soften part of the blow, but they cannot erase the basic fact that more expensive oil increases costs along the entire chain. This can ultimately be seen in higher prices for logistics, construction materials, food products and tourist services. Particularly sensitive are sectors that operate with thin margins and a high frequency of transport, as well as consumers in rural areas who depend on the car and do not have simple alternatives.
It is not only about oil, but also about a broader infrastructure risk
The current crisis shows that energy in the Middle East is much more than wells and tankers. In its analysis, the Associated Press warns that in addition to energy infrastructure, desalination plants that secure drinking water for a large part of the Gulf states are also exposed. This is an important detail because it shows how modern economic systems rely on interconnected networks of energy, water, electricity and ports. If these networks are simultaneously endangered, the consequence is not only more expensive oil, but the possibility of broader humanitarian and economic destabilisation. In that case, pressure grows on states to take extraordinary measures, and the market gets yet another reason for a rise in the risk premium.
Such interdependence is especially important to investors and analysts because it shows that the crisis cannot be assessed only by the number of affected oil facilities. It is enough for ports, storage facilities, power systems or water plants to be threatened for the entire export ecosystem to begin functioning slowly or under an emergency regime. That is why every oversimplified question of whether “Iran will close Hormuz” actually misses the broader picture. It is enough for the market that the passage formally remains open, but in practice unsafe, expensive and slow. The consequence is almost the same: some deliveries are delayed, some are rerouted, some buyers panic and increase procurement, and the price rises.
Can the world cushion a new energy shock
The answer is not yet unequivocal. On the one hand, the market is entering the crisis today with a somewhat different starting position than in some earlier energy shocks. The EIA estimates that global production in 2026 should still grow faster than consumption, which indicates the existence of a certain room to soften the blow if the security situation stabilises relatively quickly. There are also strategic reserves and the possibility of coordinated moves by the largest consumers and producers. The International Energy Agency reminds that emergency response mechanisms exist precisely so that short-term interruptions do not turn into a long-term energy crisis. On the other hand, if the disruption were to last, the very fact that a large part of the world’s seaborne energy trade depends on one narrow passage remains a fundamental problem that cannot be quickly resolved by administrative measures.
In doing so, one should distinguish between a short-term price spike and a long-lasting structural disruption. A short-lived shock can be cushioned by the market through inventories, rerouting shipments and changing trade flows. However, a longer interruption in Hormuz would raise questions about tanker availability, insurance, export quotas, refinery operations and the political responses of the great powers. Then the energy shock would very quickly grow into a broader macroeconomic problem, with stronger pressure on inflation and growth. That is why the current movement in oil prices cannot be interpreted merely as just another usual jump in the commodities market. It is a test of the resilience of the global economy to a combination of war, logistical bottlenecks and interdependent infrastructure.
Why oil is once again the main economic story
Over the past few years, it seemed that markets had to some extent learned to live with an excess of political risk, wars and supply chain disruptions. But developments at the beginning of March 2026 reminded everyone how quickly energy once again becomes the central economic topic. When the price of oil jumps, that is not news reserved for the financial pages. It is a signal that the transport of people and goods will become more expensive, that industry will plan production more cautiously, that central banks will watch inflation more carefully and that households will feel pressure on everyday consumption more quickly. That is precisely why markets today are not following only military reports, but also every piece of data on tankers, exports, alternative routes and reserves.
Oil, therefore, once again dictates market sentiment because it combines three levels of risk at once: an immediate geopolitical shock, an operational problem of physical delivery and a broader macroeconomic effect on prices and expectations. As long as the question of the security of the Strait of Hormuz and the stability of Gulf infrastructure remains open, every new escalation will have a strong echo far beyond the region. In such circumstances, energy once again becomes a measure of global insecurity, and the price of a barrel one of the most important indicators of how deeply a political crisis is entering the economy.
Sources:- - International Energy Agency – overview of the current situation in the Middle East and the effects on energy flows through the Strait of Hormuz (link)
- - International Energy Agency – data on traffic through the Strait of Hormuz, its share in global seaborne oil trade and limited alternative routes (link)
- - U.S. Energy Information Administration – analysis of the importance of the Strait of Hormuz for global oil and LNG trade (link)
- - U.S. Energy Information Administration – short-term outlook for global oil supply, demand and inventories for 2026 and 2027 (link)
- - European Central Bank – macroeconomic projections and the impact of lower energy assumptions on inflation in the euro area (link)
- - Associated Press – reports on the widening of the conflict from 28 February 2026 and regional consequences for energy and water infrastructure (link)
- - CME Group / market data – official Brent futures quotes and settlements for early March 2026 (link)
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