Geopolitical tensions in the Strait of Hormuz have reignited concerns over global oil supply, with analysts at Goldman Sachs and JPMorgan warning that Brent crude prices could breach $120 per barrel if the stalemate persists.
The strategic waterway, through which roughly 20% of the world’s seaborne oil passes, has become a flashpoint amid heightened regional hostilities. Recent incidents, including attacks on commercial vessels and retaliatory strikes, have disrupted shipping lanes and raised the specter of prolonged supply disruptions.
Goldman Sachs, in a note to clients, projected that Brent crude could reach $120 if the disruption in the Strait of Hormuz extends beyond the current quarter. The bank cited the potential for sustained supply constraints as a key driver of price volatility. JPMorgan similarly flagged the risk, estimating that a prolonged closure or significant reduction in throughput could add a premium of $10 to $15 per barrel to Brent prices.
The U.S. Energy Information Administration (EIA) has cautioned that while global oil inventories remain adequate, the concentration of supply risks in a single chokepoint amplifies the threat of price spikes. The agency noted that alternative routes, such as the Cape of Good Hope, could mitigate some disruptions but at a higher cost and longer transit times.
Market participants are closely monitoring developments, with front-month Brent futures trading near $85 per barrel as of the latest session. Analysts suggest that the current price levels do not fully reflect the geopolitical premium, leaving room for further upside if tensions escalate.
The situation underscores the fragility of global oil supply chains, particularly in regions where geopolitical risks are elevated. While OPEC+ has maintained its production targets, the potential for supply shocks in the Strait of Hormuz could force a reassessment of output policies in the coming months.
