Oil Prices Face Pressure as Strait of Hormuz Disruptions Persist

Crude oil prices are under pressure due to ongoing disruptions in the Strait of Hormuz. The standoff between the US and Iran has led to a sharp reduction in shipping traffic through the strait, with only about 10 ships passing through compared to the previous 125. This has resulted in around 8 million barrels of oil supply being lost from the market daily.

According to Jonathan Barratt, CIO at ETO Markets, if the situation doesn't improve, oil prices could continue to rise and reach $110 or even higher a barrel. The disruption is not limited to crude oil, as other commodities and inputs are also affected, increasing the risk of broader supply shortages.

Barratt warned that the impact is already being felt in refined products, with diesel and shipping fuel prices rising sharply due to higher energy costs. This could have a compounding effect on businesses and economies, which may struggle to absorb the increased input costs.