Hormuz closure raises odds of WTI reaching $110

Prediction markets increased the probability that West Texas Intermediate crude will reach $110 in May to about 56%, up from 53% a day earlier. The chance of WTI hitting $120 in May rose to about 26% from 22% over the same period. Markets updated the odds after the Strait of Hormuz was closed.

Market platforms and traders cited the closure, which has blocked roughly 20% of global seaborne oil and gas trade, as the immediate driver of the price probability changes. The shutdown followed an escalation in the Iran-Israel conflict.

Asian manufacturers, including Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, reported disruptions to oil deliveries and other shipments. Several companies have activated contingency plans while they assess how long the disruption will last.

The Strait of Hormuz links Persian Gulf producers to international markets and normally handles about one-fifth of seaborne oil and gas flows. A halt to traffic reduces near-term tanker flows and available supply, leading traders to increase bets on higher May benchmarks.

Contract-level data showed higher odds and elevated trading volumes on May WTI outcomes. A prominent May contract registered roughly 55.5% odds with about $130,000 in volume over the previous 24 hours.

Analysts and traders highlighted constrained shipments and sustained geopolitical tensions as factors behind the pricing moves. Market participants are watching any diplomatic shifts between the United States and Iran, OPEC+ production decisions, U.S. Energy Information Administration inventory reports, and any military activity that would affect shipping lanes or exports.