Investors brace for higher‑for‑longer energy shock as Hormuz stays shut and G7 readies response
Brent is on track for its biggest monthly surge on record as the Iran war throttles key oil chokepoints, forcing markets to rapidly reprice geopolitical risk and recession odds.
According to CNBC, May Brent futures closed at about US$112.78 per barrel and have jumped roughly 55 precent in March, the largest monthly gain since the contract began in 1988, surpassing the 46 precent spike during the first Gulf War.
May West Texas Intermediate (WTI) settled around US$102.88, up about 53 precent this month and back above US$100 for the first time since July 2022.
Reuters said that Iran’s effective closure of the Strait of Hormuz, which typically carries about one-fifth of global oil supply and significant liquefied natural gas volumes, has driven Brent up roughly 59 precent in March and WTI up about 58 precent, the strongest monthly rise since May 2020.
CNBC reported that shipping traffic through Hormuz has “virtually ground to a halt” since the war began on February 28.
This backdrop has left crude swinging sharply on every hint of a policy shift.
CNBC said oil prices pulled back in early Asia trading after The Wall Street Journal reported that US President Donald Trump told aides he was prepared to end US operations against Iran even if Hormuz stayed shut, arguing that forcing Tehran to reopen the chokepoint could prolong the conflict.
Reuters likewise reported that Brent and WTI slipped in Asian hours after the article said Trump was willing to end the campaign while the waterway remained largely closed.
At the same time, Trump has continued to issue hardline threats.
CNBC reported that he warned the US would destroy Iran’s oil wells, power plants and Kharg Island unless Tehran reopened Hormuz, and told the Financial Times his preferred option was to “take the oil,” comparing it to US actions in Venezuela.
CNBC also said he told reporters Tehran had agreed to “most of” a 15‑point US ceasefire proposal, while Iran publicly rejected the terms and insisted on maintaining control of the strait.
Trump has reportedly weighed sending ground forces to seize Kharg Island, a hub that handles about 90 precent of Iran’s crude exports.
Geopolitical risk now extends beyond Hormuz.
CNBC reported that Yemen’s Iran‑aligned Houthis said they launched ballistic missiles at “sensitive” Israeli military targets in support of Iran and Hezbollah, marking their first direct involvement.
Analysts told CNBC the Houthis could try to choke shipping through the Bab el‑Mandeb Strait, the link between the Gulf of Aden, the Red Sea and the Suez Canal.
Michael Haigh of Societe Generale told CNBC that between 4m and 5m barrels per day pass through Bab el‑Mandeb and warned that if another 4m barrels per day came out of the Red Sea “this leg’s oil price is much, much higher.”
Generale analysts earlier said that prolonged Middle East disruption could push crude to US$150 per barrel in April.
Supply risks are already visible.
Reuters reported that Kuwait Petroleum Corp said its fully loaded tanker Al Salmi, capable of carrying up to 2m barrels, was struck by an alleged Iranian attack at a Dubai port.
Reuters also said Saudi crude exports have been rerouted through the Red Sea, with volumes redirected to Yanbu surging to about 4.658m barrels per day last week, from an average 770,000 barrels per day in January and February, citing Kpler data.
For asset markets, the concern is how long this lasts.
Ed Yardeni of Yardeni Research told CNBC that global equities are starting to price in a “higher‑for‑longer” scenario for oil and interest rates as the risk of a prolonged conflict rises.
He warned that a continued Hormuz blockade could deepen the market pullback and raise recession risks, with uncertainty over possible greater US involvement likely to keep volatility elevated until oil flows normalise.
Policy-makers have started to respond.
Reuters reported that G7 finance and energy ministers and central bankers held a teleconference and pledged to take “all necessary measures” to preserve energy market stability as the Iran war roils prices.
The International Energy Agency’s 32 members have already agreed to release a record 400m barrels from strategic stockpiles.
Japanese Finance Minister Satsuki Katayama told Reuters that the likelihood of oil‑driven supply risks affecting markets and economic growth “has increased” and that G7 officials agreed they “cannot let this drag on.”
