Strait of Hormuz Closure Could Push Oil Prices Above US$100 per Barrel
Global crude oil markets face potential supply disruption following US strikes against Iran over the weekend, which have reignited concerns over oil flows through the Strait of Hormuz.
Crude oil prices surged more than 8% on Monday as market participants feared an uncontrolled escalation of US-Iran conflict that could trigger substantial supply disruptions. US crude rose 8.4%, or US$5.72, to US$72.74 per barrel, extending gains after market close in response to reports that Iran claimed to have closed the Strait of Hormuz. Global Brent benchmark jumped 9%, or US$6.65, to US$79.45.
Oil prices closed at their highest level since the US and Israel bombed Iranian nuclear facilities in June 2025. Prices had surged more than 12% at the session opening before retreating from peak levels. They subsequently resumed climbing following market close after Reuters reported comments from an Iranian Revolutionary Guard commander stating the Strait of Hormuz had been closed and would ignite any vessel attempting passage.
“At this juncture, it appears we are witnessing an unprecedented full-scale military conflict between the US and Iran, which is difficult to assess,” said Vandana Hari, CEO of energy research firm Vanda Insights, quoted by CNBC International.
With escalating tensions, attention has shifted back to the Strait of Hormuz, where any disruption would have immediate and substantial consequences for global oil and LNG flows.
Located between Oman and Iran, the strait functions as a critical transit route and potential chokepoint for global crude oil, with approximately 13 million barrels daily transiting it in 2025, equivalent to roughly 31% of all seaborne oil flows according to Kpler data. The strait connects major Gulf producers including Saudi Arabia, Iran, Iraq, and the United Arab Emirates to the Gulf of Oman and Arabian Sea.
Worst-case scenario: oil prices break three figures
Analysts suggest potential conflict scenarios range between limited Iranian export disruptions and a full Hormuz blockade.
The global market’s worst nightmare extends beyond Iranian oil loss to wider shipping disruptions through the strait.
“Initial indications suggest large-scale strikes against Iran, with retaliatory attacks potentially escalating to involve numerous Gulf nations,” said Saul Kavonic, head of energy research at MST Marquee.
Kavonic stated the market would initially account for various risks, ranging from loss of up to 2 million barrels daily of Iranian exports to attacks on regional infrastructure, or in extreme cases, disruption of shipping lanes through Hormuz.
Should Iran successfully close the strait, implications for global oil markets would be severe.
“This could present a scenario three times worse than the Arab oil embargo and Iranian revolution of the 1970s, driving oil prices to three-digit figures, whilst LNG prices re-test 2022 record highs,” Kavonic stated.
Andy Lipow, president of Lipow Oil Associates, said the strikes would significantly increase risks of oil supply disruptions in the region, although Iranian oil facilities have not yet been directly targeted. Lipow characterised the worst-case outcome as “strikes against Saudi oil infrastructure followed by total Strait of Hormuz closure,” estimating the probability of such a scenario at approximately 33%, given Iran may feel cornered.