Crude Price of $103 Not Accurately Reflective of Market Volatility: Trader Warns of Potential $150 Spike

US Naval Blockade of Strait of Hormuz Could Lead to Higher Oil Prices

The planned naval blockade of the Strait of Hormuz by the US could result in significantly higher oil prices than the current levels, according to a veteran oil market executive. As a result of the failed weekend talks between Washington and Tehran, Brent crude surged above $103 a barrel on Monday, signaling a global energy crisis that has shaken markets.

The US blockade, which applies to all vessels entering or departing Iranian ports, is set to begin at 10 a.m. New York time on Monday. According to Onyx Capital Group Managing Director Jorge Montepeque, the current price level does not accurately reflect the potential consequences of the blockade. He estimates that oil prices should be around $140 to $150 a barrel if the US decides to implement the blockade.

The blockade has the potential to transform a regional conflict into a global one, with a supply loss of up to 12 million barrels a day. Montepeque noted that traders are finding it difficult to comprehend the possibility of both sides of the Strait of Hormuz being blocked, which has led to relatively calm price reactions during the Asian session.

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The US blockade is expected to cause significant pain to countries that depend on oil imports, particularly in Asia and the South Pacific. Montepeque believes that if Trump dials back some of his actions, oil prices may remain around $100 a barrel for the rest of the year.