Oil Prices Hold Below $100 Despite Hormuz Blockade

Global oil prices have remained surprisingly stable, mostly staying below $100 per barrel, despite an effective blockade of the Strait of Hormuz that has lasted over 100 days. The disruption, stemming from a war between the United States, Israel, and Iran that began in late February, removed more than 10 million barrels per day from the market, causing a 14 percent drop in global crude supplies.

Donald Trump sought to mitigate the shock by authorizing the release of 172 million barrels from the U.S. Strategic Petroleum Reserve and brokering a recent 60-day ceasefire between Iran and Israel. Other stabilizing factors include a 40 percent drop in Chinese imports in May, record U.S. exports, and the use of pipelines to reroute Saudi oil to the Red Sea. Market analysts also noted the emergence of clandestine ghost fleets and tankers paying tolls to Iran to maintain limited flows.

Despite this resilience, experts warn the system is reaching a breaking point. Global inventories are depleting at a record pace, with U.S. reserves hitting 20-year lows and the Cushing, Oklahoma hub approaching operational minimums. While the International Energy Agency made 400 million barrels available to moderate prices, analysts from JPMorgan and Piper Sandler warn that Brent crude could surge to between $130 and $150 per barrel in July and August if a durable peace settlement is not reached.