SUMMARY
- Oil prices rose about 5% in two sessions amid Strait of Hormuz risks
- Banks warned closures could remove up to 4.7 million barrels per day
- Brent and WTI forecasts for 2026 were revised higher
Oil prices climbed sharply this week after escalating Middle East conflict raised fears of supply disruptions through the Strait of Hormuz, a vital corridor for more than 20% of global crude flows.
Traders reacted after Iranian state media reported an Islamic Revolutionary Guard Corps official saying the waterway had been shut and that vessels could face attack.
Israeli and US strikes on Iranian targets preceded retaliatory activity across the Gulf. The Strait of Hormuz links Persian Gulf producers including Iraq and Kuwait to global markets.
Previous tensions, including tanker seizures in 2019, briefly rattled shipping but did not halt flows. JP Morgan said crude exports from Iraq and Kuwait could halt within days if the strait remains closed, estimating losses of up to 4.7 million barrels daily.
ANZ raised its first quarter 2026 Brent forecast to $90 per barrel and LNG to $17 per mmBtu. Goldman Sachs lifted its second quarter 2026 Brent outlook by $10 to $76 and WTI by $9 to $71.
Helima Croft, head of global commodity strategy at RBC Capital Markets, said even temporary disruption could strain spare capacity.
Fatih Birol, executive director of the International Energy Agency, said strategic reserves remain available if needed.
Shipping insurers and refiners are reassessing risk premiums as oil prices respond to geopolitical signals.
The renewed volatility underscores how oil prices remain closely tied to security developments in the Strait of Hormuz.
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