Oil jumps 10% on Hormuz closure; prices eye $100 amid Middle East tensions

Oil prices surged after mounting tensions in West Asia escalated following U.S. and Israeli strikes on Iran, triggering fears of a major supply disruption through the Strait of Hormuz. Brent crude rose about 10% to around $80 a barrel in over-the-counter trading, with analysts suggesting prices could climb to $100 if the outage persists. The market moves reflect a growing sense that the key shipping lane’s closure could choke a sizable share of global oil flows.

The closure is being felt across the market as traders and energy executives monitor vessels and routes. The Strait of Hormuz accounts for more than 20% of global oil passing through its waters, and a halt to shipments has prompted swift action from tanker owners, oil majors, and trading houses who have started rerouting or delaying crude, fuel, and LNG shipments amid safety concerns.

“The military attacks themselves support oil prices, but the critical factor is the closure of the Strait of Hormuz,” said a veteran energy analyst. With the possibility of a prolonged outage, several analysts warned prices could push well beyond $100 a barrel.

In response to the tension, the OPEC+ group agreed to lift output by 206,000 barrels per day from April—a modest increase that represents less than 0.2% of global demand. Still, even with alternative routes to bypass Hormuz, the net impact could equate to a loss of 8 million to 10 million barrels per day of crude supply.

Analysts also cautioned that a sustained conflict could trigger a broader energy shock reminiscent of the 1970s, sending prices higher and potentially sparking inflationary pressure around the globe. Some market observers noted India’s oil needs would be challenged by rising prices, though there was a sense that India’s supplies remain secure in the near term.

Overall, traders are bracing for continued volatility in the near term as the region remains tense and global economies weigh the potential ripple effects on energy costs and inflation.

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