Crude Oil Surges Above $100 as Straits Tensions Grip Global Markets; $120 Surge Potential

Oil prices continued their upward trajectory on Thursday, building momentum from a sharp rally witnessed in the previous session. The key driver remains the unresolved geopolitical flashpoint between Iran and the United States. Trade restrictions and heightened tensions through the critical Strait of Hormuz continue to keep global energy markets highly volatile.

Brent crude futures briefly slipped 15 cents to $101.76 per barrel, having successfully crossed the crucial $100 threshold for the first time in over two weeks. Meanwhile, West Texas Intermediate (WTI) futures also edged lower by 14 cents, settling at $92.82.

Impact of Strait of Hormuz Restrictions on Oil Prices​

Geopolitical uncertainty remains the primary underpinning for the current price action. Tensions escalate as both Iran and the U.S. maintain limitations on vessel movement through the vital Strait of Hormuz.

Adding to market concerns, Iran recently seized two ships in the strait on Wednesday, further tightening control over the passage. The U.S. continues its naval blockade on Iranian trade. Mohammad Baqer Qalibaf, the Iranian parliament speaker, emphasized that any full ceasefire would only be meaningful if the existing blockade is lifted.

Drivers Behind the Recent Market Surge​

The initial rally was significantly boosted by concrete supply data coupled with diplomatic deadlock. On Wednesday, both Brent and WTI benchmarks had surged by more than $3 per barrel.

This surge was supported by larger-than-expected draws reported in U.S. gasoline and distillate inventories. The continued inability to finalize peace negotiations between the two nations also fueled upward price pressure.

Analyst Outlook: Structural Price Highers on the Horizon​

Market participants are viewing the current price action through the lens of structural, long-term price increases. Analysts suggest that a return to pre-conflict price levels of $70 to $75 is unlikely given the current instability.

Macquarie estimates that crude prices could remain supported in the near term within the $85 to $90 range. The firm anticipates a gradual upward climb toward $110 as supply conditions progressively improve. However, Macquarie also cautioned that prolonged disruptions through April could push Brent prices as high as $150 per barrel.

Nuvama Institutional Equities reinforced the supply risk perspective, noting that an extended closure of the Strait of Hormuz, which carries roughly 20 million barrels per day, could propel crude prices into the $110 to $150 range.

Short-Term Price Movements and Trading Bands​

Market sentiment suggests that prices are entering a phase of persistently higher valuations. The current volatility means that price movements are being driven primarily by geopolitical signals rather than any concrete supply improvement.

Analysts suggest defining trading bands for the immediate future. In the short term, price movement is likely to fluctuate between $80 to $85 on the downside. Conversely, the upside range is projected to be between $95 to $100 and higher.

The overarching consensus points to sustained risk premium due to the limited vessel activity, highlighting that normalization of global oil flows is expected to take several months.