War in Middle East Sends Gas Prices Soaring — Then Governments Release Emergency Oil Supplies

What Happened

On February 28, 2026, the U.S. and Israel launched military strikes on Iran. Within days, shipping through the Strait of Hormuz — a critical waterway where about 20% of the world's oil normally flows — dropped 95%. For nine days, roughly one-fifth of global oil supply was disrupted.

Oil prices jumped dramatically. Brent crude (a global benchmark) surged from around $73 per barrel before the strikes to nearly $120 on March 10. U.S. crude (WTI) hit above $110. At gas pumps, U.S. drivers saw prices jump from about $3.00/gallon to $3.54/gallon by March 11 — a 21% increase in just two weeks. In Canada, prices rose from 134 cents per litre to 153.5 cents per litre.

On March 11, governments took action. The International Energy Agency (IEA) — which represents 31 oil-consuming nations — agreed to release 400 million barrels from emergency reserves. This is the largest emergency release in the IEA's 50+ year history, more than double what was released after Russia's 2022 invasion of Ukraine. Germany, Japan, and Austria confirmed they would tap their reserves starting immediately.

That same day, oil prices fell sharply. WTI dropped 11.94% to $83.45/barrel, and Brent fell 11.28% to $87.80, after U.S. President Trump said the conflict would end "very soon."

Why It Matters

For drivers: Gas prices at the pump jumped 20–21% in less than two weeks. That hurts your wallet every time you fill up — and it affects everything that ships by truck (groceries, packages, etc.). The emergency oil release is designed to prevent prices from climbing even higher.

For investors: Energy stocks and oil-focused ETFs (like XLE, energy companies such as CVE.TO, SU.TO, or CNQ.TO on Canadian exchanges) surged during the crisis, but then fell sharply once the relief plan was announced. This shows how geopolitical events can create sudden volatility in specific sectors.

For inflation: Higher oil prices push up costs for heating, electricity, and shipping — which can increase inflation. Economists expect U.S. inflation to rise above 3% from higher energy costs alone.

For the broader economy: Stock markets around the world fell sharply on March 10 due to fears about the conflict and high energy costs. The Nikkei 225 in Japan fell more than 5%, and U.S. futures fell 1.6–1.7%.

What to Watch

• Whether the Strait of Hormuz shipping lanes reopen fully and when.
• Oil price movements as the strategic reserve release hits markets (more supply = lower prices).
• Gas prices at the pump — they typically lag oil price changes by a few days to a week.
• Further political developments in the Middle East and any ceasefire announcements.
• Inflation data in the coming weeks to see if higher energy costs feed into broader price increases.