Global oil markets are bracing for a significant price surge as Iran moves to restrict navigation through the Strait of Hormuz following major U.S. and Israeli strikes on Iranian facilities, with analysts warning that crude prices could spike by $5 to $10 per barrel—or even reach $100—when trading resumes.
“Should the conflict continue into Sunday, oil prices are likely to respond by increasing by $5-10 above the current $73 baseline, based on Iran’s claim to have closed the Strait of Hormuz and the disruption in tanker traffic,” energy analysts at Eurasia Group told Reuters.
Barclays analysts issued an even starker warning. “Oil markets might have to face their worst fears on Monday. As things stand right now, we think Brent could hit $100 [per barrel], as the market grapples with the threat of a potential supply disruption amid a spiraling security situation in the Middle East”.
A European Union naval mission official told Reuters that vessels in the region are receiving marine radio warnings from Iran’s Revolutionary Guard instructing ships not to pass through the Strait of Hormuz. Iran has not formally confirmed the order.
About 20 million barrels of oil, worth about $500bn in annual global energy trade, transited through the Strait of Hormuz each day in 2024, according to the US Energy Information Administration. The strait is 33km wide at its narrowest point, with the shipping lane just 3km wide in either direction, making it vulnerable to attack.
In response to the escalating tensions, several oil companies and trading firms have paused shipments of crude oil and fuel through the waterway, Reuters reported, citing trading sources.
Shipping data showed that at least 150 tankers, including crude oil and liquefied natural gas vessels, have dropped anchor in open Gulf waters beyond the Strait of Hormuz.
Even with alternative routes, shipping costs could rise 50% to 80% above current rates, while overland transport and customs procedures could add three to five days to delivery times, according to the Korea International Trade Association..
Crude oil prices have reached their highest point in six months as markets anticipate supply restrictions tied to the current Middle East conflict. An estimated 20% of international oil supplies flow through the Middle East.
A prolonged disruption of traffic in the strait—which accommodates giant tankers that ferry oil and gas from the Middle East to China, Europe, the US and other major energy consumers—would trigger a spike in oil prices and potentially destabilize the global economy.
The EIA estimated that in 2024, 84 percent of crude oil and condensate shipments transiting the strait headed to Asian markets. China, India, Japan and South Korea accounted for a combined 69 percent intake of all crude oil and condensate flows through the strait last year.
The Trump administration could tap the Strategic Petroleum Reserve if oil prices spike, said Kevin Book, managing director of Research at ClearView Energy Partners.
Several OPEC producers, such as leading exporter Saudi Arabia, came under attack from Iran. They agreed to output increases on Sunday, but unlikely by enough to avoid price increases.
The escalating conflict threatens to deliver a severe shock to the global economy, with higher energy costs potentially fueling inflation and undermining economic growth across major importing nations, particularly in Asia where factories, transport networks and power grids depend on uninterrupted Gulf energy supplies.