Geopolitical Tensions Drive Oil Prices to $110 Amid Strait of Hormuz Closure

The global energy landscape is currently under significant strain following the closure of the Strait of Hormuz, a critical maritime chokepoint. With approximately 20% of the world's oil passing through the strait, the disruption has pushed both West Texas Intermediate (WTI) and Brent crude prices to approximately $110 per barrel. The impact is being felt acutely at the pump in the United States, where gasoline prices have risen by roughly $1.00 per gallon since December, reaching approximately $3.80. Market data indicates that the U.S. has experienced a sharper percentage increase in prices—roughly 30% to 35%—compared to other oil-dependent nations such as Japan and South Korea, which saw increases in the 15% to 20% range. Analysts are observing a stark disparity in the oil futures curve, highlighting a disconnect between immediate supply shocks and long-term expectations. While front-month contracts are trading at the current $110 spot price, contracts for the end of 2026 are priced significantly lower, at approximately $70 per barrel. This pricing structure suggests that while the physical market is currently grappling with a severe supply constraint, traders anticipate a meaningful easing of prices over the next year. However, the immediate macroeconomic pressure remains high as the global economy adjusts to the loss of a primary transit route for Persian Gulf oil.