As March 2026 drew to a close, the world found itself grappling with a fuel crisis unlike any seen in recent memory. The sudden surge in oil and gas prices, triggered by the ongoing US-Israel war with Iran, sent shockwaves through global markets, upended airline operations, and left governments scrambling to shield consumers from the worst effects. The conflict, which erupted on February 28, 2026, has not only disrupted vital supply routes but also ignited a cascade of economic and political consequences that are still unfolding.
One of the earliest and most visible signs of the crisis emerged at the gas pump. On March 31, the US national average gasoline price soared above $4 per gallon for the first time since August 2022, reaching $4.018, according to data from GasBuddy and AAA. Diesel prices, too, crossed the $5 threshold on March 17 and remain more than 40% higher than before the conflict began. The March 2026 average monthly gas price is projected to be 25% higher than February's, marking the steepest monthly jump since October 1990, as reported by Macquarie Group's David Doyle and cited by CNBC.
The root of this surge lies in the dramatic collapse of oil shipments through the Strait of Hormuz, the world’s most critical maritime chokepoint for energy exports. Before the war, nearly 20% of global oil supplies passed through this narrow waterway. But attacks by Iran and retaliatory strikes by the US and Israel have left the Strait effectively closed, causing what the International Energy Agency described as the largest oil supply disruption in history. Gulf Arab oil producers, unable to move crude out, have slashed production as storage facilities fill up, further tightening global supply.
Airlines, especially in Asia, have been hit hard. Korean Air announced on March 31 that it was moving into emergency management mode to buffer the impact of surging jet fuel costs. According to the BBC, crude oil prices have leapt by over 50% since the war began, while global jet fuel prices have more than doubled. Korean Air, along with South Korea’s Asiana Airlines and Busan Air, is implementing internal cost-reduction measures, slowing upgrades, and considering flight reductions. Vice Chairman Woo Ki-hong told employees in a memo that these steps are not just a one-off but an opportunity to "strengthen our structural foundation."
Other Asian carriers are feeling the pinch as well. China Eastern Airlines warned that geopolitical conflicts could weigh heavily on its operations this year, prompting Chinese airlines to raise fuel surcharges and the government to order refineries to halt fuel exports. In Hong Kong, Cathay Pacific has hiked fares, while Japan’s All Nippon Airways is holding off on new surcharges for tickets issued in April and May, thanks to pre-existing contracts. Japan Airlines has seen prices for flights to Europe rise as demand shifts away from closed Middle East routes.
India’s aviation sector faces its own set of challenges. With flights to the Middle East—their most lucrative international market—largely canceled, India’s airlines are flying 10% fewer domestic routes between March and October. The government temporarily lifted fare caps on March 23, giving carriers leeway to raise prices as fuel costs spiral. Meanwhile, Singapore Airlines and its budget arm Scoot have increased fares, with jet fuel accounting for about 30% of their recent expenses. Singapore has also postponed a planned green jet fuel levy, originally set for April, due to the war’s impact on costs.
The crisis is not confined to Asia. Across the United States, consumers are already feeling "sticker shock" from rising gasoline and airline ticket prices, with the full effects of higher diesel prices yet to ripple through the broader economy. "This is really quickly going to ignite additional inflation," warned Patrick De Haan, head of petroleum analysis at GasBuddy, in a March 20 note. Andy Lipow, president of Lipow Oil Associates, cautioned that rising diesel costs would soon be reflected in supermarket prices and online orders.
Policymakers are scrambling to respond. The US Environmental Protection Agency is temporarily waiving restrictions on the sale of E15 gasoline—a blend containing 15% ethanol—to boost supply, with the waiver set to run from May 1 to May 20 but possibly extend further. The Trump administration has released 172 million barrels from the Strategic Petroleum Reserve as part of a coordinated 400-million-barrel global effort, and has also waived the Jones Act for 60 days, allowing foreign ships to transport fuel between US ports in hopes of reducing costs. Congress is considering suspending the federal excise tax on fuel, which could save drivers around 18 cents per gallon on gasoline and 24 cents per gallon on diesel.
Yet, as De Haan noted, "The president doesn't have a whole lot of levers." Unless oil starts flowing through the Strait of Hormuz again, analysts warn, prices could climb even higher—potentially reaching $5 per gallon. It’s "a race against time," De Haan said, as families and businesses brace for further increases.
Globally, the crisis has spurred a patchwork of emergency measures. Poland, for example, capped retail petrol prices and slashed VAT from 23% to 8% in an effort to shield consumers. In Vietnam, authorities warned of jet fuel shortages as early as April, prompting Vietnam Airlines to suspend some domestic flights. Meanwhile, larger carriers like Singapore Airlines and Australia’s Qantas are redeploying jets to capitalize on gaps left by grounded Gulf carriers, while budget airlines and smaller operators are cutting back flights or struggling to cope with older, less fuel-efficient fleets.
In the midst of the turmoil, political tensions are running high. President Donald Trump has openly pressured US allies to "buy from the US" or "just TAKE IT" from the Strait of Hormuz, as he vented frustration over their reluctance to join the war effort. He also threatened to destroy key Iranian infrastructure if Tehran does not agree to a ceasefire, a move that rights groups have warned could constitute a war crime. The European Union, for its part, has urged restraint and called for diplomatic solutions to ensure the freedom of navigation in the Strait and to protect civilians.
On the ground, the conflict’s human toll is mounting. Strikes have destroyed Iranian desalination and pharmaceutical plants, with officials warning of catastrophic consequences for civilian populations. In Lebanon, three Indonesian UN peacekeepers were killed, prompting calls for an urgent Security Council meeting and renewed pleas for all parties to respect international humanitarian law.
Amid all the uncertainty, one thing is clear: the ripple effects of the US-Israel war with Iran have reached far beyond the battlefield, reshaping global energy markets, straining international alliances, and testing the resilience of economies and households worldwide. As governments, businesses, and families adapt to this new reality, the hope for a swift resolution—and a return to stability—remains as urgent as ever.