Strait of Hormuz Closed; WTI Nears $110

The Strait of Hormuz has been closed amid military exchanges in the Middle East, halting oil and liquefied natural gas shipments and pushing West Texas Intermediate crude toward $110. U.S. and Israeli strikes on Iran preceded the escalation and commercial operators suspended traffic through the passage, leaving tankers and LNG carriers grounded.

WTI rose more than 10% over the past week while copper reached record levels as traders adjusted positions for tighter physical supplies. Prediction market pricing assigns a 51.5% probability that WTI will hit $110 in May and a 20.5% chance of reaching $150.

Markets price roughly a 1.1% probability of a Federal Reserve rate cut in June and place high odds that policy will remain unchanged into July. Traders and economists point to higher energy and commodity prices as a factor keeping inflation expectations elevated.

The closure has disrupted commodity supply chains and raised shipping costs. Companies that rely on energy and raw materials face higher input prices and longer delivery times. Governments and market participants are monitoring oil flows for signs the disruption may ease.

Any production decisions by OPEC+ members, strategic petroleum reserve releases by consumer countries, or diplomatic developments that restore transit through the strait would alter near-term supply balances. Continued restrictions on shipping would affect physical supplies and freight costs.

Analyst Alex Krainer warned, “These trends could lead to aggressive global inflation, potentially affecting European and UK markets the hardest.”

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and carries a large share of global oil and LNG exports. Past disruptions there have tightened energy markets and driven price spikes; observers are tracking developments in the strait, OPEC+ actions and Federal Reserve communications for signs of how long the disruption may last.