Global oil markets are pricing in the worst disruption to Middle East energy flows in modern history, with Brent crude spiking to $82.37 a barrel before retreating to settle around $78, as the effective closure of the Strait of Hormuz sends Wall Street banks racing to revise their price forecasts toward territory not seen since the Russia-Ukraine energy shock of 2022.
Brent crude futures surged as much as 13 percent to $82.37 a barrel on Monday, their highest since January 2025, before retreating to trade up 6.75 percent at $77.79 by late afternoon in London. West Texas Intermediate (WTI), the US benchmark, rose 5.77 percent to $70.89, having earlier hit $75.33, its highest since June.
The trigger is the shutdown of the world’s most critical oil shipping lane. Over 150 ships are now anchored outside the Strait of Hormuz after Iran’s Islamic Revolutionary Guard Corps (IRGC) formally declared the strait closed on March 2, threatening to set fire to any vessel that attempts passage. The declaration has effectively reduced tanker traffic to zero, disrupting approximately 20 percent of the world’s daily oil supply and significant volumes of liquefied natural gas (LNG).
Qatar halted liquefied natural gas production after two drones struck key facilities, and state-owned QatarEnergy was set to declare force majeure on LNG shipments. European natural gas prices surged more than 20 percent.
Major banks are now mapping four distinct scenarios for crude prices depending on how long the conflict lasts. Bank of America’s commodity strategist Francisco Blanch said Brent could surge above $100 a barrel and European natural gas could break 60 euros per megawatt hour if Iran sustains its pressure on neighbouring energy facilities. A war lasting more than three weeks would exhaust Gulf storage capacity, forcing production shutdowns and potentially pushing Brent to $120, JPMorgan’s Natasha Kaneva warned clients. Deutsche Bank analyst Michael Hsueh said Brent could reach $200 a barrel if Iran successfully enforces a full closure through mines, anti-ship missiles, and other weapons. Conversely, Blanch said prices could fall back to the $60 to $70 range if hostilities end quickly under Iran’s newly appointed leadership.
Trump told reporters on Sunday that Iran had expressed a willingness to negotiate, and that he had agreed to talks, leaving a narrow diplomatic window open even as US strikes continued. He separately confirmed to journalists at the White House that combat operations would continue for four to five weeks, adding that the US has the “capability to go far longer.”
Some market watchers urged caution against panic. Energy trader Rebecca Babin of CIBC Private Wealth noted that global oil stockpiles, particularly China’s strategic reserves, are well-stocked, which limits the immediate price impact of a short-term disruption. “The crude market is extremely measured,” she said.
For oil-importing African nations, the spike carries direct fiscal consequences through higher fuel import bills, potential inflationary pressure on transport and food costs, and currency vulnerability if dollar demand rises to cover elevated energy expenditures.
