Oil markets are bracing for a historic surge, with prices potentially hitting $150-200 per barrel if the Strait of Hormuz remains partially closed through mid-May, JP Morgan and a few other firms have warned.
On Thursday, US benchmark WTI Crude surged past Brent Crude, settling at $112, while Brent ended the week at $109 a barrel.
The Strait of Hormuz has seen dramatically reduced vessel traffic since early March. Iran currently allows only a few ships to transit.
Even if full traffic resumes today, it could take three to six months for production and refining chains to normalize.
International efforts to reopen the strait are ongoing. This week, the UK hosted a virtual meeting with over three dozen nations to secure unimpeded passage and stop Iran from imposing tolls on vessels.
Regardless, there is no sign of reopening the strait. Energy consultancy FGE NexantECA warned that prices could soar to $200 per barrel if the strait remains near-closed for six more weeks. Another group projected a record-breaking $200 per barrel should the Gulf war persist till June.