Oil prices surged by up to 5% following Iran’s announcement of the closure of the Strait of Hormuz. The declaration by Iran’s Islamic Revolutionary Guard Corps comes in response to recent U.S. military strikes, and has resulted in significant disruptions to the global oil market. The Strait of Hormuz, a crucial transit point handling about 20% of the world’s oil trade, is now closed to all vessels, including oil tankers. This development has spurred market concerns over a potential massive reduction in global oil supply, estimated at 10-11 million barrels per day.
WTI Crude Oil prices have seen notable increases, with Brent crude near $95.40 per barrel and WTI at $92.63 per barrel. Some forecasts suggest prices could rise further, potentially reaching between $120 and $150 per barrel if the blockade persists. The geopolitical tension is reflected in prediction markets, where the likelihood of WTI reaching $130 by the end of July is currently priced at 0.7% YES, indicating that market participants are assessing the impact of Iran’s actions on the oil supply chain.
Key Takeaways
Iran’s closure of the Strait of Hormuz appears to have led to a significant disruption in the global oil market.
