Oil Could Hit $150 if Hormuz Stays Shut, Analysts Warn
Reuters/News Desk
Houston: Global oil markets rallied sharply on Thursday as escalating tensions in the Middle East and uncertainty over the fate of the strategic Strait of Hormuz fueled fears of prolonged supply disruptions.
Brent crude climbed $7.87, or 7.78%, to settle at $109.03 a barrel, while US West Texas Intermediate (WTI) surged $11.42, or 11.41%, to $111.54 per barrel—marking its largest single-day gain since 2020. Despite the spike, both benchmarks remained below earlier highs near $120 reached during the conflict.
The surge followed remarks by Donald Trump, who signaled an intensification of US military operations against Iran, raising concerns about further instability in a region critical to global energy supplies.
However, no timeline was offered for de-escalation or for reopening the Strait of Hormuz, a key artery for roughly 20% of the world’s oil and liquefied natural gas shipments.
Iran’s retaliatory measures have effectively halted traffic through the narrow waterway since late February, prompting urgent international efforts to restore passage.
Tehran is reportedly working with Oman on a monitoring mechanism for maritime traffic, while the UK has convened a virtual meeting of around 40 nations to explore options for reopening the route.
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Market analysts say the central concern is no longer just physical damage to infrastructure, but the uncertainty surrounding how quickly oil flows can resume—even if facilities remain intact.
“The longer the disruption persists, the more entrenched the supply shock becomes,” said one market strategist, noting that delays in restarting exports could keep prices elevated.
In an unusual market shift, WTI traded at a premium of nearly $3 over Brent—its highest level in a year—reflecting tighter near-term US supply dynamics and contract timing differences.
Forecasts from major financial institutions suggest continued volatility ahead. Citi estimates Brent could average $95 per barrel in a base-case scenario, rising to $130 under bullish conditions. Meanwhile, JP Morgan warns prices could climb to $120–$130 in the near term and potentially exceed $150 if the Strait remains closed into mid-May.
The broader economic implications remain uncertain. Lorie Logan noted that while the US economy has some buffers, the outlook depends heavily on how quickly the conflict is resolved.
Elsewhere, geopolitical pressures are compounding supply risks. Attacks on Russian energy infrastructure have reportedly reduced export capacity by up to 1 million barrels per day, further tightening global supply. The International Energy Agency has warned that Europe may begin to feel the economic impact of disruptions as early as April.
Producers are responding cautiously. US oil rig counts rose modestly this week, but companies remain hesitant to ramp up production without sustained price stability.
Meanwhile, OPEC+ is expected to consider increasing output in upcoming talks, though analysts say any additional supply is unlikely to offset losses unless the Strait of Hormuz reopens.
As geopolitical tensions persist, oil markets remain on edge, with traders closely watching developments in the Gulf for signs of either escalation or relief.
