Oil Prices Spike Amid Prolonged Strait of Hormuz Disruption
Global oil markets are facing a prolonged supply shock due to the ongoing conflict involving Iran and the Strait of Hormuz chokepoint. The disruption has forced exporters into costly, improvised workarounds, leading to a rally in crude prices.
WTI gained 6.81% and Brent surged 5.76% to briefly reach $100 a barrel, before easing back. Analysts say markets are not yet fully pricing the risk of further disruptions.
A recent Wood Mackenzie report found that Middle East Gulf crude exports fell by 82% between January and June, with traffic through the Strait of Hormuz effectively ceasing after US-Israel strikes on Iran in February.
Producers with no alternative to the Strait are being hit hardest, including Iraq, which recorded zero exports by June. Saudi Arabia diverted flows through its East-West Petroline, but even that route has been losing steam.
A permanent transit fee is emerging as a new financial risk, with betting markets signaling a 72% probability of Iran introducing fees by year-end.