Hormuz Closure Threatens OPEC with Oil Price Spike to $140

Oil prices are edging higher as hopes for a swift reopening of the Strait of Hormuz fade, raising concerns that a prolonged disruption to one of the world's most important energy routes could send crude sharply higher.

A prolonged closure of the strait could eventually create much greater pressure on global supplies, analysts warn. The strait is one of the world's most critical maritime chokepoints for energy shipments, and a prolonged closure could push oil prices to $140 per barrel.

Despite current prices remaining far below the surge above $100 a barrel last month and the peak of more than $110 reached in May, analysts predict that if the situation remains unresolved through the end of this week or into next week, oil prices may no longer react in such a 'benign way'. Kieran Tompkins, senior climate and commodities economist at Capital Economics, said current prices appear to reflect two competing possibilities: a relatively quick return of energy flows through the Strait of Hormuz or a much longer closure.

Adegbembo warned that the market's patience has limits. If the strait stays closed and oil inventories across OECD countries continue falling rapidly, Tompkins said that tipping point could arrive around the beginning of the fourth quarter. Under that scenario, crude could potentially reach between $120 and $140 a barrel, based on historical precedents.