$150 crude oil alert: US-Iran conflict sends shockwaves through global energy markets

Brent crude rose 7.3% to surpass $100 a barrel on Monday after Washington said it would impose a naval blockade on Iranian ports, threatening to cut off vital energy supplies around the world’s most critical oil chokepoint and potentially trigger what one analyst called a “demented” supply crisis.

In a dramatic price increase, Brent jumped from $6.96 to $102 after the US military imposed restrictions on all maritime traffic entering and exiting Iranian ports from 10 a.m. ET, following the collapse of weekend talks in Pakistan aimed at ending the US-Iran conflict.

“It doesn’t really make sense. It should be $140, $150,” said Jorge Montepec, managing director of Onyx Capital Group, adding that current prices fail to reflect true risk. “The number we saw this morning – $103; an 8% increase – is not at all reflective of what could happen if the US actually decides to go through with this ban.”

Montepec said the blockade could remove up to 12 million barrels a day from global markets, turning the regional conflict into a worldwide supply crisis. “It’s in one word: hysteria,” he told Bloomberg Television’s Haslinda Amin. “The US is so focused on Iran that they’re losing sight of what they’re giving the world.” And the pain is in Asia, the pain is in the South Pacific, the pain is in anyone who depends on oil.”

Also read | Crude oil reclaimed $100 as failed peace talks triggered US moves to curb flows from Iran-linked Hormuz. What’s next?

US Central Command said the blockade would be “impartially enforced against ships of all nations entering or leaving Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and the Gulf of Oman.” Ships transiting the Strait of Hormuz to non-Iranian ports will not be intercepted, although President Donald Trump said on Sunday that US forces would also intercept ships in international waters that have paid tolls to Iran.

The enforcement action follows failed talks in Pakistan, where the US accused Tehran of refusing to curb its nuclear ambitions while Iran reportedly demanded control of the Straits, war reparations, a broader regional ceasefire including Lebanon and access to stable foreign assets.

“The mere threat of enforcement is enough to reset price risk, showing how vulnerable oil is to geopolitical triggers,” said Priyanka Sachdeva, senior market analyst at Philip Nova. “A return to triple-digit prices, or a jump in the geopolitical risk premium that faded briefly during the previous ceasefire headlines, seems reasonable.”

As traders appeared to bet that the worst-case scenario was unlikely, Montepec noted that it appeared to be “pretty crazy” to block both sides of the strait – explaining the reaction to a relatively muted Asian session despite the magnitude of the threat.

The Strait of Hormuz has been effectively closed since the conflict began, already driving up oil and gas prices sharply while raising inflation concerns and growth fears globally. Saudi Arabia said it had restored full pumping capacity through its East-West pipeline to the Red Sea and output from the Menifa field.

If Trump pulls back enforcement, oil prices could hover around $100 for the rest of the year, Montepec said. But the alternative, a prolonged blockade, could send energy markets into uncharted territory.

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