The oil market just had its worst shock in four years, and it may only be getting started. The U.S. and Israel launched strikes on Iran over the weekend. This led to the death of Supreme Leader Ayatollah Ali Khamenei on February 28 and triggered retaliation, including threats to the Strait of Hormuz (the narrow Gulf chokepoint that handles roughly one-fifth of global oil flows). Due to this geopolitical crisis crude oil posted its biggest single-day surge since 2022 on March 2.
Brent crude hit a new 52-week high of $79.40, surging 9.3% after briefly topping $82. While U.S. West Texas Intermediate (WTI), the main U.S. oil benchmark, climbed over 9% to $73.10 a barrel.
Is this panic-buying, or a rational market pricing in a very real supply threat, one that sharp-eyed analysts had been discussing for weeks?
The Strait of Hormuz: 20% of Global Oil in a 3-Mile Shipping Lane
If you want to understand why oil prices detonate on any news from the Middle East, you can start here. The Strait of Hormuz, as CBS Evening News with Jericka Duncan reported, is the critical passageway through which roughly 20% of the world’s oil moves daily.
According to the U.S. Energy Information Administration (EIA), about 20 million barrels of oil, worth approximately $500 billion in annual global energy trade, transited through the strait each day in 2024. Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE, and Iran all depend on this narrow corridor. Iran controls its northern shore.
NBC News correspondent Christine Romans reinforced this assessment, noting that higher oil prices could hit within days, and that disruption at the Strait is a global event, not a regional one.
That disruption is now live.
Iran’s elite Islamic Revolutionary Guard Corps (IRGC) has been broadcasting VHF transmissions warning that “no ship is allowed to pass the Strait of Hormuz,” Al Jazeera reports, and global shipping companies have responded accordingly. Maersk, a global shipping giant that moves roughly 20% of the world’s container trade, suspended all vessel crossings until further notice.
Muyu Xu, senior crude oil analyst at Kpler, told Al Jazeera that vessel traffic through the strait has dropped sharply since the strikes, with ships idling on both sides as shipowners grow increasingly concerned about maritime security risks.
Bloomberg’s Mike McGlone Predicted Relief. The Market Delivered the Opposite.
Before the strikes landed, Bloomberg Intelligence commodity strategist Mike McGlone appeared on Bloomberg’s “What the Iran Attacks Mean for Oil, Gold Prices” with a measured, and ultimately optimistic, read. He estimated a geopolitical premium of around $10 per barrel was already baked into Brent, putting it around $72, and suggested that if major disruptions were avoided, markets would ease.
J.P. Morgan‘s Natasha Kaneva, head of Global Commodities Strategy, had made a similar case before the strikes, saying the firm did not anticipate protracted oil supply disruptions and expected any military action to be targeted, avoiding Iran’s core oil infrastructure.
Both calls missed the mark on pace, if not direction. The physical disruption McGlone said was unlikely has materialised in full. Tanker traffic through the strait has effectively come to a halt, according to consulting firm Rystad Energy. CNBC reported the development. McGlone was right that psychology drives oil markets, he said so explicitly. But in this case, psychology and physical reality are moving in the same direction.
Analysts Are Already Revising Their $5-Per-Barrel Estimate, Way Up
Before Monday’s market open, Andy Lipow, president of Lipow Oil Associates, forecast oil could rise as much as $5 per barrel. The market blew past that within hours. With the killing of Iran’s Supreme Leader Ayatollah Khamenei and no clear successor in sight, uncertainty compounds the supply risk. Lipow warned that Iranian oil exports could collapse amid confusion over leadership, domestic unrest, and potential labor strikes at oil-producing regions and ports.
Barclays analyst Amarpreet Singh was bold: “The potential effect on oil markets is hard to overstate.” UBS analysts led by Henri Patricot told clients that the pace of traffic recovery through Hormuz and the extent of Iranian retaliation are the key variables determining oil’s near-term direction.
Goldman Sachs strategist Dominic Wilson added that “only a severe and sustained oil price disruption — as in 1990 or 2022 — would have large effects on the global growth picture,” according to a CNBC report. The word “sustained” is now the central question.
Higher Oil Means Higher Gas Prices, Within Days
Christine Romans laid out the math on NBC News: a $1 rise in crude oil generally means up to 2.5 cents more per gallon of gasoline. A $10 spike means up to 25 cents more. With WTI already up more than $5 on the day, pump prices will follow within days.
National gas prices were averaging $2.98 before the strikes, a number the Trump administration had been celebrating, CNN reported. Paul Dobson, contributing to Bloomberg’s“3-Minutes MLIV” video on YouTube flagged the knock-on effect bluntly: higher oil prices are inflationary, which pressures the bond market and complicates the Federal Reserve’s rate path. If oil sustains this surge, it feeds the consumer price index (CPI), and the Fed will have to respond.
OPEC+ Can’t Plug the Gap
OPEC+ announced a production increase of 206,000 barrels per day starting in April, part of a phased unwind of voluntary cuts, per CNN. Energy analysts were blunt, saying it won’t be enough.
Iran exports roughly 1.6 million barrels of oil per day, mostly to China. If those exports pause and the Strait stays effectively closed, the production increase is a band-aid on a gaping wound.
A Reuters poll of 34 economists and analysts published just days before the strikes raised Brent’s 2026 average forecast to $63.85 per barrel, from $62.02 in January, driven largely by war premium. Those numbers now look outdated.
J.P. Morgan had warned that further destabilization of Iran could lead to significantly higher oil prices over extended periods, citing the Iranian Revolution of 1979 as a precedent where Iranian crude production still hasn’t recovered to pre-revolution levels. That historical parallel is worth taking seriously.
The $100 Price Target Is No Longer Fringe
Analysts now predict crude could soar to over $100 a barrel if the conflict escalates further. Technical analysts note that WTI had already formed a double-bottom reversal pattern earlier this year, climbed above its 50-week and 100-week exponential moving averages, and was up over 23% from its December lows before Sunday’s strikes even landed. The commodity cycle was already turning. Iran just poured fuel on it.
Amrita Sen of Energy Aspects told CNBC today that prices likely hold near $80 for now after the initial spike, “I do think we will hold around that 80 level for some time right now,” as there has been no direct hit to core Gulf infrastructure yet.
Wood Mackenzie’s Alan Gelder warns oil could potentially exceed $100/barrel if tanker flows through Hormuz are not restored quickly.
RBC’s Helima Croft has flagged $100+ risk for weeks, noting that a war with Iran could lead to prices jumping to more than $100 a barrel.
The structure here is clear: the world’s most critical oil chokepoint is functionally closed, a major OPEC producer is in political chaos, and the U.S. is directly involved in the conflict.
Watch the Strait of Hormuz. That 3-mile channel is running the global oil market right now, and it may continue to do so for weeks.
Author: Richardson Chinonyerem
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
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