Triple Supply Shock Converges: Oil Hits $112 as Port Strikes, Hormuz Closure, and Suez Disruptions Threaten Inflation Resurgence

Oil surged to $112 per barrel in early April 2026 as three overlapping supply crises—potential West Coast port strikes, the effective closure of the Strait of Hormuz, and persistent Red Sea shipping disruptions—converged with seasonal demand growth, threatening to derail the Federal Reserve’s disinflation narrative.

Brent crude has climbed 51% since January, when it traded at $76 per barrel, according to The Middle East Insider. The rally accelerated after February 28, when US-Israeli airstrikes on Iran triggered retaliatory attacks that shut down Shipping through the Strait of Hormuz, a chokepoint handling 20% of global oil flows. Container shipping rates from Asia to the US West Coast have risen 29% since late February, reaching $2,430 per forty-foot container as of April 1, per FreightWaves.

The confluence is no accident. Iran’s Islamic Revolutionary Guard Corps effectively closed the Strait of Hormuz to commercial traffic in late February, dropping daily vessel transits from 138 to just 12 by April 2, data from United Against Nuclear Iran shows. Roughly 2,000 vessels remain stranded on either side of the blockade. Simultaneously, Houthi threats forced carriers to abandon plans to resume Red Sea transits, keeping container ships on the longer Cape of Good Hope route. Suez Canal container traffic fell 16.7% year-over-year in January to 150 transits, the weakest January in a decade, according to Global Maritime Hub.

The Labor Wildcard

The third element of the convergence is timing. The International Longshore and Warehouse Union’s contract covering West Coast ports expires July 1, 2026, with negotiations underway. Historical precedent suggests elevated risk of slowdowns or work stoppages in the run-up to contract expiration. East Coast ports saw a three-day strike in October 2024—the first since 1977—that cost the economy an estimated $3.8 billion to $5 billion, CBS News reported.

Even without a formal strike, the threat alone is enough to redirect cargo flows and inflate precautionary inventory stockpiling, compounding demand pressure. April marks the start of peak import season ahead of summer retail cycles, amplifying the impact of any labor friction. LTL contract trucking rates already sit at $46.40 per hundredweight, up 14.3% year-over-year, data from Red Stag Fulfillment shows.

Cascading Surcharges

Carriers have layered war risk surcharges atop base rates in response to the Iran conflict and persistent Red Sea threats. Hapag-Lloyd imposed $1,500 per twenty-foot equivalent unit for standard containers and $3,500 for refrigerated units; CMA CGM added $2,000 to $3,000 per TEU. For a forty-foot container moving from Jebel Ali to Rotterdam, the total surcharge stack reached $7,650 to $10,350 as of early March, according to CXTMS. War-risk insurance premiums for very large oil tankers rose from 0.125% to 0.4% of insured value per transit, adding roughly $250,000 per voyage.

Iran’s IRGC established an escorted passage system through its territorial waters, charging tankers up to $2 million in Chinese yuan per crossing—a de facto toll booth on one-fifth of global oil flows. The combined effect is a 90% to 95% collapse in Hormuz traffic since late February, described by analysts as the largest energy supply disruption since the 1973 oil embargo.

Inflation Mechanics

The macro stakes are significant. Research from the Federal Reserve Bank of St. Louis found that during the 2020-2021 pandemic, surging shipping costs accounted for 3.6 to 5.9 percentage points of annual import price Inflation. Each 1 percentage point increase in shipping costs translated to roughly 0.07 percentage points of import inflation, with pass-through effects persisting 12 months or longer. Academic work cited by the Fed indicates that when global shipping costs double, headline CPI rises by approximately 0.7 percentage points.

The current convergence delivers precisely that type of shock. Oil rallied 51% in six weeks—March 2026 was the most volatile month for crude since 2008, with Brent rising 36% from February 27 to March 27 and Dubai crude surging 76% to $126 per barrel. US gasoline prices exceeded $5 per gallon in California by mid-March, up from roughly $3.20 in February, and reached $4.50 nationally. Fertilizer prices surged 50% since the conflict began, with 30% of globally traded fertilizer normally transiting the Strait of Hormuz.

Fed Calculus Shifts

The US Energy Information Administration forecast in early March assumed Brent would average above $95 per barrel through the second quarter, then fall to $80 in Q3 and roughly $70 by year-end. That projection assumed conflict duration of four to eight weeks. Goldman Sachs raised its forecast on April 1, expecting Brent to average $110 through April with the war premium intact.

If the conflict extends beyond June—or if West Coast labor negotiations deteriorate—the disinflationary trend that shaped Federal Reserve policy through 2025 could reverse sharply. The April CPI print, due in mid-May, will capture the first full month of elevated shipping surcharges and oil prices. The May and June prints will reflect sustained pressure if current conditions hold.

Logistics Backlog Ahead

Even if the Iran conflict de-escalates and Hormuz reopens in coming weeks, the logistics aftershock will persist. Roughly 10% of the global container fleet is stranded or diverted due to Hormuz and Red Sea disruptions, according to Supply Chain Dive. Vessel repositioning, port congestion clearance, and crew rotations will take months.

Nils Haupt, senior director of corporate communications at Hapag-Lloyd, told Al Jazeera that “when the war is officially over, and the bombardments are stopped, that does not mean that the war is over for logistics, because then the real work starts.” Svein Ringbakken, managing director of the Norwegian Shipowners’ Mutual War Risks Association, echoed the assessment: “The short answer is that it would take months to get shipping supply chains back to normal because of the backlog.”

What to Watch

The April CPI release in mid-May will offer the first hard data on how the triple shock is transmitting to consumer prices. Watch for signs of broadening price pressure beyond energy—particularly in food, where fertilizer costs and shipping surcharges compound. Federal Reserve commentary in the weeks ahead will signal whether policymakers view the supply shock as transitory or a structural break requiring policy adjustment.

On the geopolitical front, any de-escalation signal from Iran or progress toward Hormuz reopening would alleviate immediate pressure, though logistics recovery will lag. Domestically, ILWU negotiation headlines merit close attention through June—any hint of impasse or slowdown warnings will accelerate precautionary inventory builds and tighten trucking capacity. Goldman’s $110 Brent forecast through April implies a war premium of roughly $40 above pre-conflict levels; sustained pricing at that level would force broader macro recalibration across equity valuations, currency markets, and sovereign debt yields.