The biggest focus of the Israel-Iran conflict: the day the Strait of Hormuz is closed, and oil prices exceed $100?

mitrade
2025.06.16 02:35

The conflict between Israel and Iran led to a 10% increase in international oil prices last week. JP Morgan warned that if the Strait of Hormuz is closed, oil prices could soar to $120 per barrel. The strait is a key passage for 20% of the world's crude oil and liquefied natural gas transportation. Although analysts believe the likelihood of a blockade is low, if it occurs, it would have a significant impact on the global economy. The current WTI oil price is $72.25 per barrel, and the Brent oil price is $75.13 per barrel

TradingKey - The conflict between Israel and Iran has caused international oil prices to surge by 10% last week, reversing a previous downward trend. Wall Street is currently concerned about whether this new battlefield in the Middle East will lead to the closure of the Strait of Hormuz, a critical chokepoint for global crude oil transportation. JP Morgan warns that such a move could push oil prices to $120 per barrel.

The conflict between Israel and Iran erupted on June 13, with both sides conducting multiple drone and missile attacks. On June 14, senior Iranian officials stated that they were seriously considering whether to block the Strait of Hormuz—this strait is a vital route for 20% of global crude oil transportation and 20% of global liquefied natural gas transportation.

JP Morgan stated on the 13th that Iran is a significant crude oil supplier, accounting for about 4% of global crude oil production. The real risk lies in the potential for the Middle Eastern conflict to spread to a broader region or critical transportation routes, such as the Strait of Hormuz. The Middle East accounts for one-third of global crude oil production, and the alignment of regional participants could complicate the crude oil supply situation further.

JP Morgan warns that Israel's attacks on Iran could lead to oil prices soaring to $120 per barrel, with a worst-case scenario probability of 17%. As of the time of writing, WTI oil prices are at $72.25 per barrel, and Brent oil prices are at $75.13 per barrel.

The institution added that their forecast comfort zone remains in the range of $60 to $65 per barrel, as a surge in oil prices could impact U.S. inflation, and U.S. President Donald Trump, who has promised to lower energy prices, would not sit idly by.

However, JP Morgan also stated that the likelihood of such a blockade is extremely low, as Iran "would certainly pay a heavy price" for it: retaliation for violating international norms; it could be seen as a direct threat to the economic interests of most Gulf countries, affecting major customers such as China, India, Japan, and South Korea.

Deutsche Bank analysts also conveyed concerns that the threat of a blockade of the Strait of Hormuz could push oil prices above $100. The institution stated that given the potential significant impact of a blockade on the global economy, this move could be Iran's "last resort" in extreme circumstances

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