(Bloomberg) – Oil prices posted their largest single-day gain in four years as conflict in the Middle East disrupted tanker traffic through the Strait of Hormuz and heightened concerns about supply from one of the world’s most critical producing regions.
Brent crude climbed roughly 9% after briefly topping $80/bbl, while diesel futures jumped more than 20% at one point. Maritime security agencies described the threat level in the Persian Gulf as “critical,” with several vessels reportedly targeted over the weekend. Many shipowners are now avoiding transit through Hormuz.
The strait handles roughly 20% of global oil flows and a similar share of liquefied natural gas exports, making the pace of traffic normalization a key variable for markets. JPMorgan estimates that a disruption lasting 25 days could force producer nations to curb output as storage fills.
In one of the first confirmed impacts to physical infrastructure, Saudi Aramco reportedly halted operations at its Ras Tanura refinery following a drone strike in the area, though crude exports from the adjacent port continued. Natural gas markets also tightened after Qatar shut the world’s largest LNG export facility.
The conflict escalated after U.S. and Israeli missile strikes targeted sites across Iran, prompting retaliatory attacks by Tehran against Israel and U.S. facilities in the region. Conflicting claims followed regarding naval engagements and tanker strikes near Hormuz, adding to uncertainty.
Despite the sharp price spike, markets remain mindful that global supplies were relatively well balanced before the outbreak of hostilities. Additional risk factors include halted loadings at a key Russian export terminal following Ukrainian drone attacks.
Over the weekend, OPEC+ reaffirmed plans to raise output by 206,000 bpd next month. However, analysts note that spare capacity—largely concentrated in Saudi Arabia and the UAE—would provide limited relief if Hormuz disruptions persist.
Oil prices are now up roughly 30% year-to-date. Citigroup expects Brent to trade in the $80–$90/bbl range in the near term, while Morgan Stanley raised its second-quarter forecast to $80/bbl.
Iran produces approximately 3.3 MMbpd, or about 3% of global supply, but its strategic position along Hormuz gives it outsized influence over global flows. Wood Mackenzie warned that crude could exceed $100/bbl if tanker traffic is not restored quickly.
A sustained price surge would increase inflationary pressures globally, complicating the outlook for central banks already balancing economic growth and price stability.
For now, markets are pricing in disruption risk. The trajectory of tanker flows through the Strait of Hormuz—and the status of regional infrastructure—will determine whether the current spike proves temporary or marks a more prolonged supply shock.
