The Sunday before last, crude oil gapped higher as it reopened after the weekend. Front-month WTI hit its highest level since June 2022, just below $116 per barrel. It proceeded to pull back sharply, dropping 34% to trade near $76 on Tuesday. That filled in the gap on the chart, and since then, oil prices have rebounded again, with both Brent and WTI topping $100 per barrel overnight.
Source: TN Trader
The latest leg of the rally has been driven by the ongoing blockage of tanker traffic through the Strait of Hormuz, a narrow maritime corridor that typically carries about 20% of the world’s oil supply. The conflict escalated over the weekend after US forces targeted Iranian military facilities on Kharg Island, a hub responsible for roughly 90% of Iran’s crude exports.
While President Trump stated that oil infrastructure was not directly struck, he warned that the US could target crude facilities if Iran continues to attack shipping routes, in particular the Strait of Hormuz.
Washington is also pushing allied nations to assist in safeguarding this critical chokepoint. According to reports, the White House could soon announce a multinational coalition to escort oil tankers through the Strait. The escalating tension has dramatically reshaped global energy markets and remains one of the most significant risks facing the global economy.
