Hormuz closure could lift Brent by $20 through June

The U.S. Energy Information Administration warned an effective shutdown of the Strait of Hormuz through late June would add roughly $20 a barrel to Brent, bringing prices to about $125-$130. The agency tied the estimate to continued disruption of the narrow 21-mile channel that handles about one in five barrels of traded oil worldwide.

The EIA said the strait has been largely closed to shipping since late February amid military activity in the region. In its base case, the agency still projects Brent averaging $106 a barrel for May and June, reflecting some expected market adjustments. Brent averaged $117 in April.

If the strait remains closed past late June, the EIA applies a roughly $20-per-barrel premium to its forecasts. The agency expects production shut-ins to peak near 9.1 million barrels per day in April and to stay elevated if the closure persists, which would quickly draw down inventories in import-dependent economies.

The closure has raised insurance costs for vessels and forced many shipments onto longer routes, increasing delivery times and freight charges. Economies that rely on shipments through Hormuz, including Japan, South Korea, India and much of Europe, face heavier competition for alternate supplies and higher import costs.

Higher crude prices would raise pump prices for gasoline, diesel and jet fuel and increase shipping and manufacturing input costs. The EIA cautioned markets could remain volatile; in some scenarios it models a possible peak near $115 in the second quarter of 2026. The agency’s longer-term outlook projects Brent falling below $90 a barrel by late 2026 if disruptions ease and production and inventories recover.

Traders have shown sharp reactions to reports on diplomatic or military developments at the strait, and markets are monitoring any extension of the current closure for its effect on global oil flows and prices.