Brent and U.S. crude futures jumped more than 10% after President Trump said he would reimpose the U.S. blockade on Iranian shipping through the Strait of Hormuz. Traders and Gulf producers now treat the waterway’s disruption as a lasting shift rather than a passing crisis.
Oil markets and Middle East producers are settling around a new assumption: the Strait of Hormuz will not return to its prewar norm. Renewed fighting over the weekend and President Trump’s move to reimpose the U.S. blockade on Iranian shipping pushed Brent and U.S. crude futures up more than 10%, erasing a month of declines that had built as Gulf skirmishing waned and tanker traffic appeared to be returning.
Crude posts its sharpest move since 2020
Brent crude has jumped 13% so far this week as of early Tuesday, trading above $86 a barrel, with prices lifted again after Iran attacked two tankers in the Gulf. The nearly 10% rise on Monday was the largest daily percentage gain since May 2020, when prices were recovering from the Covid lockdown crash.
West Texas Intermediate reflected the same jolt but stalled lower. WTI gapped higher on Monday and briefly cleared $80 a barrel, yet it could not hold the highs and has been testing a range between $78 and $80. The pullback suggests larger players see anxious pressure in the market rather than outright panic.
Producers plan to engineer around Hormuz
The mood among analysts is that the disruption will endure. According to WSJ: “the region and Hormuz going back to the old normal is effectively zero” said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security. Saudi Arabia, Iraq and the United Arab Emirates have identified the strait as a persistent vulnerability and plan to build new and expanded pipeline capacity to other ports to keep pumping oil.
Those pipelines could allow more than 45% of prewar Gulf oil exports to bypass Hormuz by the end of 2027, according to Goldman Sachs. If the plans are accelerated, the bank said, pipelines would cover 75% of the region’s oil exports by the end of 2028.
Sources: The Wall Street Journal, DailyForex
Trading involves risk.
Risk Disclaimer
