Brent crude futures climbed to $90 a barrel this week for the first time in nearly two years, as a widening Middle East conflict brought shipping through the Strait of Hormuz to a near-complete halt. The global benchmark surged as much as 7.6% in a single session, while West Texas Intermediate topped $85 for the first time since April 2024. Taken together, futures have gained more than 20% in just one week.
The scale of the disruption is staggering. Estimates suggest the global crude market is losing between 7 million and 11 million barrels of supply each day because of the Hormuz standstill. Last year, roughly 20 million barrels of oil and petroleum products moved through that narrow waterway daily, representing about one-fifth of the world’s total oil flows. Ship-tracking data now shows that marine traffic through the strait has all but collapsed.
The Hormuz bottleneck deepens
A multinational naval advisory group described the situation at Hormuz as a near-total pause in commercial activity, attributing the breakdown to security threats, insurance constraints, and widespread operational uncertainty. The ripple effects have been swift and severe. Kuwait has begun cutting output at some oil fields after running out of storage capacity for landlocked crude. Refineries and tankers have sustained direct hits as the hostilities have spread across the region.
The conflict, which drew in roughly a dozen nations after military operations began in late February, has now placed enormous pressure on producers, governments, and consumers alike. Saudi Arabia raised the price of its flagship crude grade for Asian buyers by the largest margin since August 2022, and the kingdom has begun rerouting millions of barrels through Red Sea ports to sidestep Hormuz entirely.
Governments scramble for answers
The White House has signaled it is weighing options to ease price pressures, though officials moved quickly to downplay any immediate release from the Strategic Petroleum Reserve, a stockpile of crude stored in massive underground caverns. Officials described the administration’s toolkit as broad, with both short-term measures and more complex longer-horizon responses under consideration. U.S. pump prices reached $3.32 per gallon, the highest level since 2024.
Japan has been exploring a reserve release of its own, and there is growing speculation among traders that a coordinated drawdown from multiple nations’ emergency inventories could be announced to send a stronger collective signal to the market. No formal action has been confirmed.
The U.S. Treasury also granted a short-term waiver allowing India to purchase Russian crude, limited to oil already at sea when the authorization was issued. Indian refiners had already secured more than 10 million barrels of Russian supply, with at least some of those purchases finalized before the waiver was formally announced.
How high can prices go
Analysts are now openly discussing a path to $100 per barrel and beyond. One prominent Wall Street bank warned that if very low oil flows through Hormuz persisted for another five weeks, Brent could breach that threshold. A Gulf energy minister went further, suggesting prices could reach $150 a barrel within two to three weeks if tanker traffic remained unable to pass through the strait.
The bank’s baseline scenario still calls for a gradual recovery in shipments and an average Brent price of $76 in the second quarter, but that outlook depends heavily on a conflict timeline that remains deeply uncertain.
Elsewhere, the price shock is already reshaping behavior. European diesel futures posted their largest weekly gain on record, rising more than 50%. China instructed major refiners to halt gasoline and diesel exports to protect domestic fuel availability. Central banks across multiple economies have flagged growing concern about an inflation resurgence driven by energy costs.
For now, the market remains on edge, watching a waterway that has never mattered more.
