Why are oil prices spiking when the US is the largest oil producer?

If only 20% of the world's oil is shipped through the Strait of Hormuz, and that Strait is in dire straits due to the USA's war with Iran (and Iran's war with everywhere else), why are oil prices going through the roof?

Oil is currently (6th March 2026) hovering around $90 a barrel - $86, $88, $99, depending on which metric you look at - and is expected to leap past $100 very soon, levels not seen since the early days of the Russia-Ukraine war. It was below $60 just a couple of months ago.

Doesn't that seem like an exaggerated reaction? I mean, 80% of oil production still goes nowhere near the Strait of Hormuz. The USA is the largest single producer followed by Russia (here's a fascinating animation of how the main producers have changed over the years). But in terms of regions, the Middle East is still the biggest producer, followed by North America and then Russia and its satellites, and all of Middle East's production is being affected by the US-Iran conflict, regardless of how it is transported.

Another factor is the destination of the oil that flows though the Strait of Hormuz: some 89% of the oil that is shipped through the Strait is bound for Asia, and 83% of.the liquid natural gas. So, it's regional effect is much more marked than the overall average might suggest. The war in Iran is already causing  an energy crisis in South Asia. The markets take that into account too.

Oil is a global, fungible commodity. We are told to think of oil as the contents of a bathtub with many taps and many drains. So, regardless of who produces the oil (fills the bathtub) and who uses it (drains the tub), there is essentially one global price (a bath full of homogeneous water). Or here's another good explanation using a swimming pool analogy. So, if one part of the global supply becomes more expensive, say because of an unnecessary and ill-advised regional war, the price rises for everyone. The same applies to liquid natural gas, pharmaceuticals, helium, and any number of other commodities that typically use the Strait for delivery purposes. Such is the consequence of globalized trade.

Also, bear in mind that oil markets, like stock exchanges, do tend to over-react to everything before correcting themselves if the sky turns out not to be falling after all.