Hormuz crisis sends oil higher

by AZADEH AKBAR, AHMED HUSSAIN, LOUISE MOREAU & WILL COOPER
TEHRAN – GLOBAL oil markets have been jolted after renewed military tensions involving the United States and Iran reignited fears over the security of the Strait of Hormuz, the world’s most critical energy chokepoint.

Brent crude climbed more than 4 per cent to trade above US$80 a barrel, while West Texas Intermediate breached US$75, as investors responded to mounting geopolitical risks rather than any confirmed interruption to physical supplies.

Although crude shipments continue to move through the narrow waterway, traders are increasingly factoring in the possibility of shipping delays, higher insurance costs and greater security risks should hostilities intensify.

The Strait of Hormuz carries approximately one-fifth of the world’s oil consumption and a significant share of global liquefied natural gas exports.

The passage links the Persian Gulf with the Gulf of Oman and the Arabian Sea, providing the principal export route for Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Iran.

Any blockade or prolonged disruption would reverberate across international energy markets within days.

Energy analysts warn that even a partial closure could remove millions of barrels of crude from global supply chains, forcing importing nations to seek alternative sources at considerably higher prices.

Such a scenario would almost certainly accelerate inflation, increase transport and manufacturing costs, and complicate monetary policy for central banks already navigating fragile economic recoveries.

Market participants across major trading hubs echoed those concerns.

A United States energy market representative said the latest escalation had injected a substantial geopolitical risk premium into crude prices, noting that traders were reacting to uncertainty rather than an actual supply shortage.

A Middle East commodities analyst warned that any disruption to tanker traffic would have immediate consequences for both oil and liquefied natural gas exports, potentially triggering significant price volatility.

European energy traders said the region remained particularly exposed because higher crude prices would inevitably feed into electricity generation, industrial production and consumer inflation, placing renewed pressure on businesses and households.

Across Africa, market observers cautioned that oil-importing economies would face rising fuel import bills, weaker currencies and mounting fiscal pressure, while major exporters could enjoy short-term revenue gains if elevated prices persist.

Asian energy analysts described the Strait of Hormuz as indispensable to regional energy security, warning that countries heavily dependent on Gulf crude, including China, India, Japan and South Korea, would face increased procurement costs and heightened supply risks.

For now, global markets remain on edge.

Whether the latest confrontation develops into a prolonged conflict or is swiftly contained will determine not only the trajectory of oil prices, but also the outlook for inflation, economic growth and energy security worldwide.

– CAJ News