Trump says conflict will be “very complete, pretty much” as crude whipsaws on Hormuz disruption
Oil just erased and created hundreds of billions in energy wealth in days – all because one narrow waterway is effectively shut.
Oil benchmarks have whipsawed from nearly US$120 a barrel to the low US$80s as the US and Israel’s war on Iran disrupts flows through the Strait of Hormuz and markets trade every headline like a binary bet on supply.
According to CBC News, Brent crude surged to US$119.50 per barrel early Monday, its highest since after Russia’s 2022 invasion of Ukraine, before plunging below US$90 later that day.
West Texas Intermediate (WTI) also spiked above US$119.48 per barrel, up from about US$70 before the war began on 28 February, then dropped in tandem.
BNN Bloomberg reports that on Tuesday both Brent and WTI fell about 15 percent – to US$84.73 and US$80.31 respectively – after US President Donald Trump predicted the war with Iran could end soon, which traders read as limiting supply disruption.
Reuters said that by early Wednesday, WTI had rebounded 3.5 percent to US$86.33 after an 11 percent plunge the day before, while Brent traded in the high US$80s.
Another Reuters report said oil eased again after the Wall Street Journal reported the International Energy Agency had proposed the largest release of reserves in its history.
CBC News reports that the conflict has already created “the largest oil supply shock ever,” citing Cornell University historian Nicholas Mulder, who estimates Gulf producers are shutting in “roughly three to four times as many barrels of oil” as during the 1973 and 1979 crises.
Major producers such as Iraq, Kuwait and the United Arab Emirates have cut output as storage fills while Iran, Israel, and the US have attacked oil and gas facilities since the war began.
The core of the shock is the Strait of Hormuz.
Source: Al Jazeera
CBC News says fears of Iranian missile and drone attacks have “all but stopped” tankers carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran.
According to Al Jazeera, more than 20m barrels per day – about one-fifth of global petroleum consumption and one-quarter of all seaborne oil trade – normally transit the strait, which narrows to 21 nautical miles.
Since the war started, marine traffic there has “nearly ground to a halt” as ship operators anchor at the edges rather than risk attacks.
AP News said portfolio manager Hakan Kaya of Neuberger Berman described “the outlook for oil right now” as “about as binary as it gets,” arguing that a reopened Hormuz would erase the risk premium, while a continued shutdown would trigger “the largest supply disruption in modern history.”
On the upside risk, CBC News cites Macquarie Research strategists who say crude could reach US$150 per barrel or higher if Hormuz stays closed for only a few weeks, surpassing the pre‑2008 record near US$147.
Reuters reports that Wood Mackenzie estimates the war is cutting Gulf oil and products supply by about 15m barrels per day and also warns crude could rise to US$150.
Oxford Economics, by contrast, expects prices to average about US$80 this quarter but says “the risk of a more prolonged crisis has clearly increased.”
BNN Bloomberg reports that Wood Mackenzie’s Simon Flowers warns that even if the war ends, “cranking up the supply chain won’t be swift.”
He says product in storage can move quickly, but wells shut in for a prolonged period could take weeks or longer to recover.
The demand and macro hit is most acute in Asia but has global implications.
CBC News reports that higher oil and natural gas costs are pushing fuel prices up and “jolting Asian economies” heavily reliant on Middle Eastern imports.
Al Jazeera notes that about 89 percent of oil that flows through Hormuz is bound for Asian markets, with China, India, Japan and South Korea the top buyers.
South Korean President Lee Jae Myung has warned refiners and gas stations against hoarding or colluding on prices and urged a shift away from supplies that must transit Hormuz.
The Kospi index fell 6 percent to 5,251.87.
On the consumer side, CBC News says higher energy costs are pushing up inflation and squeezing household budgets, while Al Jazeera notes that oil and gas underpin everything from transport fuel to plastics, synthetic fabrics, cosmetics and fertilisers.
Economists now fear stagflation, pointing to 1973, 1978 and 2008 as examples where major oil spikes preceded global recessions, and warns that lower‑income countries that import large amounts of grain and fertiliser could quickly face food shortages.
Source: Al Jazeera
For travel and discretionary spending, US airline stocks have fallen and United Airlines CEO Scott Kirby has warned that spiking fuel costs could mean higher airfares.
Oil analyst June Goh told CBC News that travellers should “book trips sooner rather than later” because airline hedges cannot absorb sustained jet fuel prices indefinitely, meaning “the consumer will need to feel the pain.”
