When the U.S. and Iran start rattling sabers, energy traders get nervous. And for good reason—this isn't just about political posturing. It's about the world's most important oil highway potentially getting shut down.

WTI March futures are up 1.47% over the past week, trading at $59.17 per barrel, with another 0.42% gain on Sunday night. Natural gas February futures jumped 2.30% during the day to $3.242 per MMBtu. The message from markets is clear: geopolitical risk is back on the menu.

Why the Strait of Hormuz Matters So Much

Picture a narrow waterway wedged between the Persian Gulf and the Gulf of Oman. Now imagine that roughly one-third of all seaborne oil shipments and 19% of natural gas flow through this single chokepoint every single day. That's the Strait of Hormuz.

The U.S. Energy Information Administration reports that an average of 20 million barrels per day passed through this strait along the coasts of Iran, the United Arab Emirates and Oman in 2024. It's not an exaggeration to say this narrow waterway is critical to global energy security.

Last year, Iran's parliament actually voted to authorize a potential closure of the strait if the U.S. launched airstrikes on Iranian nuclear sites. So the threat isn't theoretical.

Goldman Sachs analysts had previously warned that such a scenario could spike Brent crude to $110 per barrel before settling down. "The economic incentives, including for the US and China, to try to prevent a sustained and very large disruption of the Strait of Hormuz would be strong," they said. Translation: everyone has skin in this game.

According to the Institute for Energy Research, close to 80% of the oil flowing through the strait heads to Asia, mainly China, India, South Korea and Japan.

Can Global Surplus Cushion the Blow?

Here's the good news: energy markets in 2026 are sitting on a comfortable 3.84 million barrels per day surplus, according to the IEA. The bad news? That cushion wouldn't come close to offsetting a major disruption at Hormuz.

WTI February crude oil futures gained 0.51% on Sunday to $59.24 a barrel, up 1.58% for the week. February natural gas futures rose 2.27% on Sunday to $3.240 per MMBtu. The United States Oil Fund LP (USO), which invests primarily in light, sweet crude oil futures, closed up 0.36% on Friday.

What Trump Is Saying About Iran

President Donald Trump said Friday that the U.S. will come to the "rescue" of Iranians amid escalating protests against their government. Then on Sunday, speaking to reporters aboard Air Force One, Trump claimed Iranian leaders "want to negotiate" following his threats of military action. But he added a notable caveat: "we may have to act before a meeting."

The timing is particularly notable given that U.S. forces recently raided Venezuela, which resulted in the capture of President Nicolás Maduro last week. The message seems to be that Trump is willing to back up his threats with action.