Crude oil prices jump 10pc after strait of Hormuz closure

Global crude oil prices surged 10 per cent on Sunday (March 1) amid escalating tensions in the Middle East and the closure of the Strait of Hormuz, a vital maritime corridor for global energy supplies.

Brent crude climbed to nearly $80 per barrel, with analysts warning prices could approach $100 if disruptions persist.

Ajay Parmar, Director of Energy and Refining at ICIS, said while recent military strikes contributed to market volatility, the primary driver of the price spike was the shutdown of the strategic waterway.

Following warnings from Tehran, most tanker owners, major oil companies, and trading houses have suspended shipments of crude, refined fuels, and liquefied natural gas (LNG) through the strait.

More than 20% of the world’s oil supply transits through the Strait of Hormuz, making it one of the most critical chokepoints in global energy trade.

Parmar cautioned that a prolonged closure could push prices well above $100 per barrel. Middle Eastern leaders have already warned Washington that a broader conflict involving Iran could trigger triple-digit oil prices.

In response, the OPEC+ alliance said Sunday it would increase production by 2,06,000 barrels per day starting in April—equivalent to just 0.2% of global demand—raising concerns that the additional output may be insufficient to offset supply disruptions.

Meanwhile, Asian economies are reviewing strategic petroleum reserves and exploring alternative shipping routes to mitigate potential shortages.

Jorge Leon, an economist at Rystad Energy, estimated that even with alternative routes, the market could face a daily shortfall of 8 to 10 million barrels.

He added that prices could jump by as much as $20 at market open, potentially pushing crude to around $92 per barrel in the near term.