The ongoing US-Iran war has now taken a new route, a pathway that is directly impacting the oil industry. This new narrative has ended up pushing Iran to shut the Strait of Hormuz, leading the world to anticipate and intensify the looming oil crisis. With the ongoing war strikes happening at present, what if Iran ends up extending this Strait of Hormuz shutdown? Will it impact the prices of oil way past the predicted timelines?
Also Read: Iran US War: What To Expect From Stock Market This Week?
Role of the Strait of Hormuz
As the name suggests, Hormuz is a strait between the Gulf of Oman and the Persian Gulf. This strait alone is dubbed as an important chokepoint, the only exit that allows the 20% of the world oil trade to flow smoothly through the sea. This crucial point has now been shut by the officers of the Iranian regime, making it harder for the trading ships to pass through. At the same time, it’s the only trading sea outlet for oil-pricing countries like Kuwait, Qatar, and Bahrain, leaving them with no alternatives to consider at the moment.
“The Strait of Hormuz, between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. This body of water controls ~20% of the world’s petroleum liquids consumption. In other words, ONE FIFTH of global oil consumption flows through here EVERY DAY.”
This situation had earlier been characterized as catastrophic in JP Morgan’s 2025 report. The recent Iran-US clashes are not new. These clashes over time often projected the closure of Hormuz. However, this time, the ongoing tensions have escalated quickly, resulting in Iran announcing the closure of the strait. This scenario was earlier predicted by JP Morgan. The firm later shared that this closure may ultimately end up sending oil prices to $120 to $130 a barrel.
“After US strikes on Iran last night, ships in the Strait of Hormuz are now receiving warnings. As of 12:30 PM ET, the US has recommended ships avoid the Strait of Hormuz. In their 2025 analysis, JP Morgan described this as their worst-case scenario in an Israel-Iran war. In fact, according to JP Morgan estimates, a closure of the Strait of Hormuz could send oil prices to $120-$130/barrel. This would imply a spike in US CPI inflation to ~5%. The last time we saw US inflation at 5% was in March 2023, when the Fed was aggressively hiking rates.”
More Staggering Oil Price Forecasts
If this closure extended for several days or more, it could send the oil prices soaring past $100 in such a case.
“The turmoil and bombing across the Middle East will surely be a catalyst to disrupt oil distribution globally, which will inevitably lead to price hikes. The magnitude and duration of pump price increases depends on how long the conflict goes on.” As shared by Edmund King of AA (BBC)
Per Kpler, such restrictions may end up spiking the oil prices to $85 to $90. However, the portal expects the Brent crude to settle down eventually, hitting a normal price threshold of $75 once the geopolitical escalations relax in due time.
“We expect Brent crude to open Monday in the $85-90 range, up from Friday’s close near $73/bbl. Some scenarios put the intraday high above $88. By week’s end, the majority viewpoint points to Brent settling back into the $70-80 range, though this assumes no further escalation.”
Also Read: BRICS in Crisis: Member Struck, But the Bloc Stayed Silent