Oil Prices Surge to $110 Amid Strait of Hormuz Crisis, June 07

The Strait of Hormuz closure has pushed Brent crude oil to $110 per barrel, up 68% since the conflict began on February 28, 2026. The waterway carries 20% of global crude supply. Major banks now forecast prices could reach $130 to $150 if disruptions persist through June. The standoff threatens global inflation, shipping costs, and economic growth.

How the Crisis Pushed Oil Above $100

Brent crude jumped from $63 per barrel in early February to $110 by early June as military escalation closed the Strait of Hormuz. The 21-mile waterway connects the Persian Gulf to the Arabian Sea and handles roughly 20 million barrels daily. Tankers remain stranded, producers have suspended output, and storage nears capacity. Goldman Sachs raised its fourth-quarter forecast to $71 per barrel from $66, citing longer disruption assumptions.

Banks Warn of $150 Oil Under Worst-Case Scenarios

Citi raised its base-case forecast for Brent to $110, $95, and $80 per barrel for Q2, Q3, and Q4 2026. Under a bull-case scenario with 30% probability, Citi warns Brent could spike to $150 if flows remain disrupted through June. Morgan Stanley kept its forecast at $110 for Q2 and $100 for Q3, expecting supply chains to take months to normalize. Goldman noted spot prices briefly topped $119, the highest level since mid-2022.

Shipping Costs and Global Inflation Surge

Container freight rates have doubled since late February. Transpacific rates to the US West Coast jumped 20% in one week alone, reaching $3,933 per FEU. Asia-Europe routes posted substantial gains as carriers grapple with network disruptions and rising fuel costs. The OECD flagged prolonged disruptions to oil, gas, and fertilizer prices as a risk to global growth. Congestion at transshipment hubs like Singapore is worsening as vessels are rerouted around Africa, adding 10 to 14 days per voyage.

What This Means for Oil-Dependent Economies

Japan and other Asian nations depend on the strait for 84% of crude flowing through Hormuz. Oil-importing countries face higher import bills and renewed inflation pressure. Oil-exporting nations like Nigeria gain fiscal windfalls but face supply chain strain. Texas, the US largest energy producer, may see only modest economic gains due to uncertainty about how long elevated prices will last and a more diversified state economy requiring fewer workers per unit of output.

Final Thoughts

Brent crude at $110 reflects genuine supply loss, not speculation. If the Strait of Hormuz stays closed through June, oil could hit $150, amplifying global inflation and slowing growth. Investors should watch peace talks closely.

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