Global oil prices have reached their highest levels in years as the combined effect of the Strait of Hormuz closure and the US naval blockade creates unprecedented disruption to international trade, with Brent crude surging to $127 per barrel on Friday before settling at $121.40 and US West Texas Intermediate hitting $118.60.

The price spikes have been exacerbated by the diversion of major shipping routes away from the Gulf, with container ships now adding up to 20 days to journeys between Asia and Europe. The extended routes are adding an estimated $1-2 million in additional fuel costs per voyage, costs that shipping companies are passing on to manufacturers, retailers, and ultimately consumers.

Major energy analysts at Goldman Sachs, JPMorgan, and Morgan Stanley have all warned that without a resolution to the Hormuz crisis, prices could reach $150 per barrel by June. A spokesperson for the International Energy Agency said the agency was "monitoring the situation very carefully" and that OPEC+ had "an important responsibility to act."

OPEC+ sources told Iran Observator that the group rejected a request from the United States for an emergency output hike at a virtual summit Friday, with Saudi Arabia and the UAE insisting they would not increase production to compensate for sanctions-related disruptions. The kingdom's energy ministry said the group "remains committed to market stability," language widely interpreted as a refusal to bail out the US sanctions regime.

The European Union is considering emergency funding for alternative energy routes, including the Trans-Caspian pipeline corridor that would bypass the Gulf entirely. The proposed route would carry Caspian Sea oil and gas through Azerbaijan and Turkey to European markets, though analysts note it would require years of infrastructure investment to become viable at scale.

In Iran, the economic strain is being felt acutely. Fuel rationing has been reinstated for the first time since the 2019 protests, with long queues forming at gas stations across major cities including Tehran, Isfahan, and Mashhad. The government has also imposed domestic consumption caps as it struggles to manage shortages caused by its inability to export refined petroleum products.

The economic strain is being felt globally, with inflation concerns mounting in the United States, Europe, and developing nations that rely on imported energy. US Consumer Price Index data for April, released Friday by the Bureau of Labor Statistics, showed a 0.4 percent monthly increase in energy prices, the largest monthly jump in three years.

The IMF has warned the conflict could shave 0.8 percent off global GDP growth, with the impact falling disproportionately on developing economies in Asia and Africa that are more dependent on imported oil and have less fiscal capacity to absorb price shocks. Egypt, Pakistan, and Bangladesh are among the most exposed nations, with import bills already under severe strain from existing debt burdens.

India's government announced Friday that it was tapping its strategic petroleum reserve and working with state-owned refiners to diversify supply sources, including increased purchases from Russia, the United States, and West African producers. Japan and South Korea have made similar moves, with both countries accelerating contracts with non-Gulf producers.

At the retail level in Europe, diesel prices have risen to record levels in several countries, adding to the political pressure on governments already facing voter discontent over the cost of living. In the United Kingdom, average diesel prices surpassed £1.80 per liter for the first time, prompting opposition calls for an emergency fuel duty cut.