Jorge Leon, Senior Vice President and Head of Geopolitical Analysis at Rystad Energy reacts:
“Iran has retaliated in a far more aggressive and expansive manner than in prior exchanges, targeting US military bases in the region and even conducting attacks on its key Gulf allies.”
“This marks a structural widening of the conflict beyond contained or symbolic strikes.”
“The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million bpd of crude oil from reaching markets. “Alternative infrastructure in the Middle East can be used to bypass the Strait’s flows, but the net impact remains an effective loss of 8-10 million bpd of crude oil supply.
“Elevated global benchmark prices and steep backwardation are expected to be sustained until the Strait is again passable.
“This appears to be driven by heightened tensions and precautionary decisions by ship operators and insurers rather than a confirmed physical blockade by Iran.
“From a market perspective, however, the distinction is secondary.
Whether the Strait is closed by force or rendered inaccessible by risk avoidance, the impact on flows is largely the same.
“Nations with strategic petroleum reserves may take action and release volumes if the disruption of the Strait risks being extended.
“Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil at the start of the week.”
Approximately 15 million bpd of crude oil transit the Strait of Hormuz, representing close to 30% of global seaborne crude trade.
This makes it the most critical oil chokepoint in the world. Any sustained disruption, formal or de facto, would remove a substantial portion of globally traded crude from the market.
Options to bypass the Strait are limited. Saudi Arabia can redirect volumes via its East-West pipeline to the Red Sea, which has about 5 million bpd of capacity.
The UAE can utilise the Abu Dhabi pipeline, with capacity of around 1.5 million bpd.
Even assuming full utilisation of these alternative routes, a significant share of exports, potentially in the range of 8 - 10 million bpd, would remain exposed if the Strait remains inaccessible.
There are mitigating buffers. Saudi Arabia has increased crude loadings in recent weeks, and strategic petroleum reserves held by major consuming nations, including China, could provide some temporary cushioning to the market.
Even so, such buffers are inherently finite and designed to smooth short-term shocks rather than offset sustained structural disruptions.
If the Strait of Hormuz were to close, the most likely scenario is that it would be temporary, potentially lasting one to two weeks.
A prolonged closure would carry severe geopolitical consequences and likely provoke a rapid international response.
That said, even a short-lived disruption would create a significant logistical backlog. Tanker congestion, rescheduling of cargoes, and port delays could take several additional weeks to normalise, meaning the market impact would likely persist well beyond the formal reopening of transit lanes.
From a price perspective, we continue to believe that unless there are clear and credible signals of de-escalation over the weekend, oil markets will open sharply higher.
In such a scenario, Brent could jump by around US$20/bbl on Monday as risk premiums are rapidly repriced.
This move would reflect not only the probability of physical disruption but also the extreme uncertainty surrounding maritime flows, retaliation dynamics and political escalation. Should the Strait remain effectively closed or energy infrastructure be confirmed as damaged, the upside risks to prices would increase further.
Moreover, OPEC+ is scheduled to meet and is reportedly discussing a larger-than-expected production increase.
Under normal circumstances, a higher output hike would exert downward pressure on prices. Yet, if crude cannot physically exit the Gulf due to Hormuz constraints, incremental production increases will have limited immediate market impact.
In such a scenario, the constraint is not upstream supply capacity but export routes and maritime transit.
At present, there are no signs of de-escalation.
The diplomatic track appears effectively stalled. The risk profile has shifted from contained military exchange toward systemic disruption risk.
Going forward, the most critical indicators to monitor include any reopening of diplomatic channels, the reaction of GCC governments following direct attacks on their territory, confirmation regarding the reported deaths of senior Iranian leaders and Tehran’s official posture, any verified targeting of energy infrastructure, and real-time maritime traffic patterns through the Strait of Hormuz.
Continued military strikes and retaliatory exchanges will further shape market expectations.
The conflict has now entered a materially more dangerous phase.
For global oil markets, the effective status of the Strait, whether physically blocked or functionally avoided, is the dominant variable.