Natalie Kitroof: From the New York Times, I'm Natalie Kitroof. This is the Daily.

Natalie Kitroof: As the war on Iran enters its second week, concerns about a global energy crisis are growing. In the last week, as Iran tightened its chokehold on one of the world's most vital shipping routes and the Trump administration sent mixed signals about how long the war would last.

Oil was on another roller coaster again today.

Oil prices have swung wildly. It shot up like a geyser to $119 a barrel, but they surged to their highest levels in years. Today, oil prices closed down about 9% at $86 a barrel

and then suddenly plunged.

Natalie Kitroof: The war with Iran is impacting 20%, a fifth of the world's oil supply, making this the worst oil disruption the world has ever experienced. Today, my colleague Rebecca Elliot on how the volatility has exposed just how much the world depends on the narrow waterway at the center of the growing crisis, the Strait of Hormuz, and how quickly shutting that strait down can throw global energy markets into utter chaos.

Natalie Kitroof: It's Wednesday, March 11th. Rebecca, welcome to the Daily. First time on the show. Thank you for being here.

Rebecca Elliot: Yeah, thanks so much for having me, Natalie.

Natalie Kitroof: So, we are coming to you because you are, I think it's fair to say, an undisputed authority on oil here at the Times. And over the last week, the concerns over the war in the Middle East have grown to include not just a very real and dangerous conflict, but also building panic over a potential global energy crisis stemming from that conflict. And all of that worry has focused on this one shipping route that butts up against Iran, which is the Strait of Hormuz. So tell us about that strait.

Rebecca Elliot: The strait sits between Iran to the north and then Oman, United Arab Emirates to the south. It is essentially a choke point through which about a fifth of the world's oil and a lot of natural gas normally goes every day. It allows oil and gas from the Persian Gulf to reach world markets. And the challenge with the strait is that it's really narrow. It's only about 21 m wide at its narrowest point and the shipping lanes are even smaller.

Rebecca Elliot: Oman's maritime security center says an oil tanker has been attacked in the street of Kmuz, injuring four crew. And so what has been happening since this war started is that some vessels passing through the straight have been attacked.

Attention all ships. Attention all ships. Attention all ships from now on. All navigating through the straight of Horos is forbidden. No ship in every time.

Rebecca Elliot: And what you're seeing is that traffic through the straight has just slowed to a trickle. While this is not an officially recognized closure, shipping has been completely stalled in the straight for a combination of reasons. One, physical security.

Rebecca Elliot: Iran has attacked a number of vessels in the region since the war started. And so people are worried for their safety, worried about okay, what happens if there is an attack on a tanker that is filled with oil. Revolutionary Guards commander did say that they will set fire to any ship trying to pass that is.

Rebecca Elliot: You also have a lot of insurance companies saying, you know what, this isn't for us, right? So, it's a lot harder and a lot more expensive to get the kind of financial backing that you would want to make this journey.

Natalie Kitroof: Okay. And you said these tankers are backed up. What's the fallout of that?

Rebecca Elliot: So what you have is vessels essentially waiting stuck on either side of the straight

stranded

Rebecca Elliot: stranded tankers can't get in to pick up the oil and gas that they're meant to and they can't get out. And so that means that a huge amount of energy is not reaching world markets. More than 80% of the oil and what is known as liquified natural gas. This is gas that has been cooled so that it can be put on a ship. More than 80% of that from this region normally goes to Asia.

Natalie Kitroof: Wow.

Rebecca Elliot: And so without being able to count on that energy arriving soon, you're starting to see prices rise really dramatically.

Rebecca Elliot: And oil prices have been really volatile since the war started. And one of the starkkest examples of that happened this past Sunday evening into Monday when you saw prices swing by as much as I think around $30 a barrel, which is a lot.

Rebecca Elliot: Which is a lot, right? So prices on Sunday night reached above $100 a barrel for the first time since 2022, which of course was kind of in the aftermath of Russia's invasion of Ukraine.

Natalie Kitroof: Yep.

Rebecca Elliot: And they really swung a huge amount throughout the day as people tried to figure out how long is this war going to last? How long is it going to remain difficult to get oil out of the Persian Gulf? And people trying to read the tea leaves of President Trump's remarks about the war, which seem to change every day. It seems like we get a new piece of information from Trump, sometimes contradictory information about how long this is going to go on.

Rebecca Elliot: Yeah, it's really unclear sitting here today what exactly the goalposts are. And the answer to that question means a lot for the energy market. Gasoline has gotten more expensive. Diesel has gotten more expensive in the US. So, it's more expensive to fill up your car than it was before the war started. And you're seeing governments in many parts of the world start to make policy changes,

Rebecca Elliot: ration energy. Some really good examples that my colleagues have written about in the last few days is, you know, South Korea said it would cap prices at the pump for the first time in almost 30 years.

Natalie Kitroof: Wow.

Rebecca Elliot: India temporarily suspended cremations using gas. So you're seeing governments basically try to fast track energy efficiency measures and kind of implement other tools meant to prevent them from running out.

Natalie Kitroof: Right. They're trying to basically limit their usage for now as much as possible.

Rebecca Elliot: Exactly. Many countries that depend on energy from outside of their borders are saying we might not be able to count on getting more. So let's do the best we can with what we have now.

Natalie Kitroof: Right. And as the conflict has dragged on and on, the conversation seems to have turned much more to the possibility that what we may be looking at is a genuine oil shock, a genuine supply shock. And I think one of the main questions that people are asking is how bad is this going to get? Honestly, anyone's guess. It is so hard to predict oil prices. And in trying to answer this question, I've been thinking a lot about the oil shocks that the world experienced in the 1970s.

Rebecca Elliot: So 1973, Israel was in a war against Egypt and Syria. The United States backed Israel.

World wars among big powers are quite possible to control dwindling oil supplies. And in response, the Arab members of an oil cartel known as OPEC cut the US off from oil produced in that region.

Rebecca Elliot: The Middle East war produced developments all over the world. Today, the oil producing countries of the Arab world decided to use their oil as a political weapon. They

So overnight, the United States lost access to a tremendous amount of oil. If the Arab countries keep that pledge, it would reduce their production by almost 50% in one year.

Rebecca Elliot: Members of OPAC at the time were also raising prices. And so what you saw between October 1973 and early that following year was oil prices quadrupled.

Natalie Kitroof: Just extraordinary.

Rebecca Elliot: Which is just extraordinary. And so the shocks to economies around the world were huge.

To increase the supply of heating oil that will be available this winter, we must adjust production schedules and divert petroleum which might normally go for the production of gasoline to the production of more heating oil.

In the Dallas area today, dealers raised prices to more than 40 cents a gallon.

Rebecca Elliot: Not only was energy a lot more expensive almost overnight, there also wasn't enough of it. Well, my son is trying to see how much gas we have left in the tank and whether we can make it out on the Sawmill River Parkway. So, he stuck his walkie-talkie antennation.

Are you willing to slow down to 50 mph?

No. Why not?

Cuz it's stupid, you know. And I

Rebecca Elliot: The government implemented a nationwide 55 mph speed limit on US highways. I've been in two gas lines already

this morning.

This morning.

How long did you wait for the first?

I've been in both lines over an hour and I'm out of gas. Dead out.

Really long lines to get gasoline.

This is unreal. Isn't this disgusting? Why doesn't anybody contact the president? Why is he letting this happen to us?

Rebecca Elliot: People were panicking.

Natalie Kitroof: Yeah, it's kind of wild to imagine oil rationing in the United States. Do we really think that's a possibility today?

Natalie Kitroof: How apt is the comparison between that shock and what we're experiencing now?

Rebecca Elliot: The world looks really different today than it did 50ome years ago. And that's partly to do with changes that many countries made in response to that energy crisis. You had major efforts to reduce dependency on oil, whether by figuring out how to use it more efficiently or by transitioning to alternative forms of energy. One example that I just learned about was in Japan in an effort to try to use air conditioning less. The prime minister pushed for people to start wearing short sleeve suits. Apparently, it never caught on.

Natalie Kitroof: What an image. I wish it had.

Rebecca Elliot: It would be kind of an interesting look.

Natalie Kitroof: Definitely. You know, those are some examples of ways that countries tried to use less oil. Fuel economy standards are a legacy of that moment. And you also saw many places shift toward alternatives such as nuclear energy. And this is, you know, really motivated by concerns about energy security. You're saying the shift toward prioritizing things like fuel efficiency in cars, toward drawing on other fuel sources, that's primarily about countries trying to secure their own energy independence, trying to protect themselves essentially from a repetition of what happened in 1973,

Rebecca Elliot: right? And in the US, one of the biggest differences is that the country went from being a net importer of oil to a net exporter today. And how did that happen?

Rebecca Elliot: Fracking. Drilling down horizontally under the earth and fracturing the rock to let oil and gas come up. And this really revolutionized the US oil and gas industry and helped the country become the world's top producer of oil and gas, passing Saudi Arabia, passing Russia. And this in combination with the buildout of renewables in recent years has made the country much less dependent on oil and gas from the Gulf than it used to be. Basically, since 1973, the whole world in response to that crisis has become a lot less dependent on oil, relatively speaking. And the US in particular has become much less dependent on foreign countries for the oil that it does consume. That's right.

Rebecca Elliot: Things look very different today than they did in the 1970s. Oil meets a much smaller share of the world's energy needs. That said, it still matters in big ways for the economy. Oil and gas are used for a whole lot of things that we need every day. producing electricity, producing gasoline and diesel and jet fuel. So when you don't have access to those fuels, it ripples through the global economy in ways that will get much worse the longer the straight remains effectively closed.

Natalie Kitroof: We'll be right back.

Natalie Kitroof: Rebecca, you've made it clear that the effects of this building crisis are going to compound, are going to get worse and worse each day that this shutdown continues. You told us earlier that there were currently many ships just stranded waiting to pass through the Strait of Hormuz with very few actually making it. What is the outlook for those stranded tankers? Barring the war ending, is there any way this situation changes in the Strait in the near term?

Rebecca Elliot: The strait is one of Iran's very big points of leverage and Iran has said that it will attack vessels that go through and so it's hard to imagine the situation shifting considerably in the near term. The United States, President Trump have floated some ideas

during this brief disruption. The United States is offering political risk insurance to any tankers operating in the Gulf. So,

one being providing additional insurance options

will uh perhaps go alongside of them for protection. We don't think it'll be necessary if it is.

The other being a naval escort for tankers through the straight

and if they do anything, the price will be incalculable.

Rebecca Elliot: So far, the US has not escorted a vessel through the straight.

Natalie Kitroof: So, we'll see. But remember, if you're a mariner, Iran has committed to disrupting the straight.

Rebecca Elliot: Yeah.

Rebecca Elliot: Several tankers have been attacked. A shipyard worker died in Bahrain. There are huge physical risks here at the moment associated with making this journey. And I think until that changes, whatever that looks like, it's still going to be very difficult to get energy out of the Persian Gulf. So, what about the oil companies? Obviously, this is a huge problem for them, too. They have all this oil just sitting around and they can't get it to where it's supposed to go.

Rebecca Elliot: That's right. And they're running out of places to put it. storage tanks are filling up. And so you've started to see countries throughout the region cut back production, turn off wells, and reduce refinery processing. So that means they're turning less oil into gasoline and diesel and other products.

Natalie Kitroof: And just explain, Rebecca, why it's such a big deal that they are turning off the spigot. What does that actually mean? It's not the same thing as turning off your faucet where when you turn it back on, water just comes right back out again. It's called shutting in a well. When you do that, you can risk damaging the well essentially. And so when you try to turn it back on, maybe there's not enough pressure, not as much oil is going to come out. And so the risk is that these disruptions last longer than the war. And what countries are going to be most affected by what's happening? Who's going to feel it first and most deeply?

Rebecca Elliot: I'm going to oversimplify and divide the world between producers and consumers. M if we're talking about the consuming countries, many of those that are going to be affected fastest are those in Asia, for example, that depend really heavily on imported oil and natural gas. And then on the producer side, it's the countries that can't get anything out. One of the countries that acted really quickly was Qatar, which is a huge natural gas producer and exporter. And within days of the start of the war, they decided to stop cooling natural gas for export.

That caused prices basically immediately to rise considerably in Europe and in Asia. Right? These are pretty major decisions, right? I mean it's not just major for the countries that produce it. It's the countries that are depending on it. It has an immediate impact.

Rebecca Elliot: Absolutely. And remember oil markets in particular are global. So even though in the United States we produce tremendous amounts of oil, we're still affected by higher prices elsewhere. Right? Just because we're not dependent on the straight in the same way, we are still affected by the disruption to it and the chaos that it unleashes on the market.

Natalie Kitroof: And to that end, Rebecca, is there anything the administration could do to limit the potential impact of all this on consumers in the US, especially as the war keeps going on?

Rebecca Elliot: The Trump administration has a few options. One of the first is what's known as the strategic petroleum reserve. So going back to the oil crisis in 1973. After that, the US created a strategic stockpile of oil. And so in moments like these, the US has the option of releasing some of that oil into the market. And that has been kind of an active conversation in recent days, not just in the US, but among other countries known as the G7. Another option that would have a potentially limited effect would be to temporarily lift the gasoline tax, which would save people 18 cents on a gallon. So that would take some of the pressure off. And in a very extreme scenario, you could see Congress stepping in to ban oil exports. That type of a ban was actually in place until 2015.

Natalie Kitroof: Oh wow.

Rebecca Elliot: You couldn't export oil from the US. And then Congress lifted that during the Obama administration as the US became the biggest oil producer in the world largely because of fracking. I haven't kind of heard that as being a realistic scenario or quite on the table yet, but that is the kind of extreme option that the US might have.

Natalie Kitroof: Okay. So, not a lot on the table and what is available that could make a real difference may be quite radical. What about longerterm solutions here? I'm thinking about the 1973 oil embargo and how that compelled many countries including the US to reduce their dependence on oil. Do you see this crisis as having a similar potential effect, forcing policy makers, lawmakers to rethink their energy needs, to redesign them? In other words, what do you think the long-term lessons of this crisis could be?

Rebecca Elliot: That's going to depend a lot on how long this situation lasts, how high energy prices get, and how long they stay there.

Rebecca Elliot: in a scenario where they remain expensive for a long time. I think that thinking about 1973 and the aftermath is instructive. Big events like this do tend to change behavior, change how people think about energy. The reaction may be different in the United States, which is very rich in oil and gas, right? and where Trump has been very adverse to these alternative fuel sources. I mean, it's hard to imagine him jumping back into renewables in a way that we'd been seeing in the past, right? This is all happening as the Trump administration is making it more difficult to install solar panels and wind turbines and other equipment that would enable us to harness the sun and harness the wind. So I think the reaction will differ regionally, but in countries that are really dependent on foreign sources of oil and natural gas, they may think more seriously about, okay, how do we move to alternatives perhaps even more quickly than we were before? But you have to wonder, or at least I do, whether in this case, people, policy makers, lawmakers just end up looking at this episode and blaming Trump and Israel for it, for all the disruption that has followed from the initial attack. Like, this appears, I think, to many as a war of choice. And and those strikes are what prompted all of this. And so it seems possible that there would be some reticence to see this as revealing some sort of structural problem and more of a willingness to see it as potentially a one-off attributable to these two leaders in this moment and their decisions. It's certainly possible.

Rebecca Elliot: But what I think has been very clear over the last several days and weeks is that this huge risk that energy experts have been talking and thinking about for years, the risk that the Strait of Hormuz would close is now playing out in real time. I think it's hard to imagine that people just go back and say, "Okay, this is fine." People remember gas prices. It's one of those things that is in your face all the time every day,

Rebecca Elliot: right? And it's hard to imagine that, especially if prices rise further and stay there for a long time, that it won't shape and change how people think about energy. It's exposing a big vulnerability in the global energy system. And we know from price shocks in the past that when events like this happen, people change. The whole world changes.

Natalie Kitroof: Well, Rebecca, thank you so much.

Rebecca Elliot: Thank you for having me.

Natalie Kitroof: We'll be right back.

Natalie Kitroof: Here's what else you need to know today. The US military said on Tuesday evening that it had attacked 16 Iranian mine laying vessels near the straight of Hormuz. Earlier in the day, Trump had threatened Iran over reports that mines were being deployed in the straight. The news capped off a day of confusion about the viability and security of the passageway. After the US energy secretary posted on social media that a Navy warship had successfully escorted a tanker through the straight, oil prices plunged in a sign of new optimism about the route opening up. But then shortly afterward, a military official said that hadn't happened. The social media post was deleted and prices went back up.

Natalie Kitroof: And on Capitol Hill,

I emerge from this briefing as dissatisfied and angry, frankly, as I have from any past briefing in my 15 years in the Senate.

Natalie Kitroof: After receiving a classified briefing from Trump officials on the war, Senate Democrats warned that the administration was not close to achieving its goals. We seem to be on a path toward deploying American troops on the ground in Iran.

Natalie Kitroof: And demanded public hearings on the objectives and endgame for the war.

This is a disaster of epic proportions. It's already getting Americans killed. It's driving up prices here at home. This has just been a debacle, uh, a 10-day debacle.

Natalie Kitroof: And air strikes continued in Lebanon on Tuesday, where Israel's mass evacuation orders and bombing campaign have made the country a new front in the expanding war. A humanitarian crisis is looming there, and the United Nations has said that 700,000 people in Lebanon have been displaced from their homes.

Natalie Kitroof: The Pentagon said on Tuesday that Iranian air strikes had wounded 140 US service members in addition to the seven US service members who have been killed.

Natalie Kitroof: Today's episode was produced by Caitlyn O'Keefe, Diana Wyn, and Nina Feldman. It was edited by Devin Taylor and Lisa Chow and contains music by Dan Powell and Marian Lozano. Our theme music is by Wonderly. This episode was engineered by Alyssa Mossley.

Natalie Kitroof: That's it for the Daily. I'm Natalie Kitroof. See you tomorrow.