The Strait of Hormuz has returned to the center of global energy concerns as reciprocal attacks between Israel and Iran intensify, raising fears that any disruption to the critical maritime corridor could trigger a sharp surge in oil prices worldwide.
A report by India-based Equirus Securities warns that if Tehran retaliates by closing or significantly disrupting traffic through the strait -- the world’s most vital energy supply route -- crude oil prices could climb to between $95 and $110 per barrel.
Iran currently produces about 3.3 million barrels of oil per day, accounting for roughly 3% of global supply. The report notes that oil remains the central economic variable in the escalating tensions. Historically, a 1% disruption in global oil supply has pushed prices up by 3% to 5%. On that basis, even a disruption limited to Iran’s output could lift crude prices by 9% to 15%.
With oil currently trading at around $70 per barrel, a direct loss of Iranian supply alone could add $6 to $11, pushing prices into the $76–81 range. However, analysts caution that market responses to geopolitical shocks are rarely linear.
Any threat to shipping through the Strait of Hormuz could generate what analysts describe as a “geopolitical premium” of $20 to $40 per barrel, even without a full blockade. Under such a scenario, prices could rapidly approach or exceed $100.
Goldman Sachs has previously warned that a complete closure of Hormuz by Iran could drive oil above $100 per barrel, sharply increasing global production costs and feeding into higher consumer prices, particularly for food, textiles and chemicals.
Oil markets have already reacted to the renewed hostilities, with prices rising nearly 10% in recent days amid heightened geopolitical risk. Analysts say expanded U.S. military deployments in the Middle East have added to market volatility, with investors bracing for the possibility of further strikes on Iranian targets.
The Strait of Hormuz carries roughly one-fifth of global oil shipments -- close to 20 million barrels per day -- in addition to significant volumes of liquefied natural gas (LNG). As the only maritime gateway to the Persian Gulf, bordered by Iran on one side and Oman and the United Arab Emirates on the other, it remains one of the most strategically sensitive chokepoints in the global energy system.
According to a report by the International Crisis Group, Tehran possesses multiple options short of formally declaring a blockade. These include harassing tankers, restricting navigation during military exercises, deploying drones, or boarding vessels. Such measures could disrupt traffic, increase insurance premiums and raise shipping costs without triggering an outright closure.
Equirus notes that conflicts often add a geopolitical premium to oil prices in their early stages, before markets gradually adjust through rerouting supplies and rebalancing production.
Although Iran has repeatedly threatened in the past to close the Strait of Hormuz, it has never implemented a full shutdown. However, analysts say that even limited disruption in the current climate of heightened tensions could have outsized economic consequences.
