JPMorgan Chase has warned that Brent crude prices could surge to $120 per barrel if oil flows through the Strait of Hormuz are severely disrupted during a full-scale conflict in the Middle East.
According to the bank’s estimates, major Gulf oil producers could continue normal output for around 25 days even if the strait is completely blocked. After that, storage facilities would likely reach capacity, forcing producers to scale back or halt output, which could push global prices sharply higher.
Oil markets already reacted strongly after reports of the killing of Ayatollah Ali Khamenei in a joint US-Israeli operation. The strikes reportedly targeted missile sites, command centers and senior leadership positions in Iran.
In response, Iran launched missiles and drones at Israel and US military facilities in the Persian Gulf region, including locations in Bahrain and the United Arab Emirates.
Although the Strait of Hormuz remains officially open, shipping activity has reportedly dropped by about 70 percent. Nearly 200 tankers carrying crude oil and liquefied natural gas have either anchored or changed course to avoid the area.
Major global shipping companies, including Hapag-Lloyd and CMA CGM, have suspended transit through the strait as a precaution.
Given that a significant share of the world’s oil and LNG passes through the Strait of Hormuz, any prolonged disruption could have serious implications for global energy markets and inflation.
