Oil Prices Stabilize Following Hormuz Disruption Assessment

Global Oil Market Surges Amid Conflict in the Middle East

Oil prices surged by 5% to reach $76 a barrel, with Brent crude prices rising to their highest level since January 2025. The increase was driven by the effective closure of the Strait of Hormuz, a critical waterway that handles a fifth of the world's oil and large volumes of gas, due to the US-Israeli war against Iran.

Tanker traffic through the strait has largely halted, with self-imposed pauses by shipowners and traders as the conflict spreads. Iranian authorities have stated that the key waterway remains open, but have also attacked three oil tankers. In response, President Donald Trump announced that US forces sank nine Iranian naval ships, and that combat operations will continue until all objectives are completed.

The conflict has led to a significant shift in the global oil market, with OPEC agreeing to raise quotas next month by 206,000 barrels a day. This move was expected, but the outbreak of hostilities has added an element of uncertainty to the market.

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Gold prices have surged in response to the conflict, while global equities have initially dived before recovering some losses. Morgan Stanley has raised its second-quarter Brent forecast to $80 a barrel from $62.50, while Citigroup analysts expect prices to trade in the $80-to-$90-a-barrel range over the coming week.

If tanker traffic in the Strait of Hormuz is not restored quickly, oil prices could exceed $100 a barrel, according to Wood Mackenzie. Even with OPEC raising production in April, the bloc's additional volumes and spare capacity will be inaccessible if the waterway remains closed.