Oil surges past $90 as Strait of Hormuz shipping collapses
(Bloomberg) — U.S. oil futures surged above $90/bbl for the first time since October 2023 as the escalating conflict involving Iran disrupted critical energy flows and effectively halted most tanker traffic through the Strait of Hormuz.
The U.S. benchmark gained more than 11% during the session, putting prices on track for the largest weekly percentage increase in at least two decades. Global benchmark Brent crude also rallied sharply, climbing more than 8% to trade above $92/bbl.
The Strait of Hormuz — a narrow waterway linking the Persian Gulf with global markets — normally carries roughly one-fifth of the world’s oil supply. Citigroup estimates that disruptions to shipping through the chokepoint could temporarily remove between 7 MMbpd and 11 MMbpd of crude supply from the global market.
The latest rally marks a sharp reversal from earlier this year when oil prices were pressured by abundant supply and weaker demand expectations. With Middle East tensions escalating and shipping through Hormuz effectively halted, traders are increasingly pricing in the risk of a prolonged supply disruption that could tighten global crude balances and push prices even higher.
See also: Qatar loads first LNG cargo since force majeure
Map of the Strait of Hormuz. (Map Source: Global Energy Infrastructure.)
