Global oil markets surged as geopolitical tensions in the Middle East intensified, with the Strait of Hormuz—handling roughly 20 million barrels per day of crude—emerging as a focal point amid speculation of U.S. military involvement in Iran. The benchmark Brent crude price climbed to $98.40 per barrel, while West Texas Intermediate hit $92.65.
- Strait of Hormuz handles ~20 million barrels per day of global oil supply
- Brent crude (BZ=F) reached $98.40 per barrel, WTI (CL=F) at $92.65
- OIL ETF up 4.2%, XOM +2.8%, CVX +3.1% on risk premium
- Shipping insurance premiums rose up to 60% for vessels in the region
- Potential supply shock could push crude toward $120/barrel
- Global freight rates increased 15% in one week
The Strait of Hormuz, a narrow waterway through which nearly 20% of global oil supply passes, has returned to the center of energy market concerns following escalating rhetoric between the United States and Iran. With U.S. military assets redeployed to the region and intelligence assessments suggesting potential strikes, traders are pricing in heightened supply disruption risks. As a result, crude futures on the New York Mercantile Exchange and ICE Futures Europe spiked, reflecting growing anxiety about potential chokepoint closures. Key energy benchmarks responded sharply: CL=F (WTI) rose 3.7% to $92.65 per barrel, while BZ=F (Brent) reached $98.40, its highest level since late 2023. The broader OIL ETF gained 4.2%, signaling broad-based investor caution. Major integrated oil companies including ExxonMobil (XOM) and Chevron (CVX) saw their shares climb 2.8% and 3.1% respectively, reflecting market expectations of higher earnings amid volatile supply conditions. The economic implications extend beyond energy markets. A sustained closure of the strait could trigger a global supply shock, pushing crude prices toward $120 per barrel in extreme scenarios. Shipping insurers have already raised premiums for vessels transiting the region by up to 60%, and global freight rates have increased by 15% over the past week. Industry analysts warn that even a temporary disruption could cause ripple effects across global manufacturing, transportation, and inflation metrics. Market participants are closely monitoring U.S. military movements, diplomatic channels, and satellite imagery from the region. The situation underscores the persistent vulnerability of critical maritime chokepoints and the fragility of global oil supply chains in the face of regional instability.