Oil Prices Rise On Brink Of Escalation Over Strait Of Hormuz

• U.S. crude oil prices climbed 1.3% to $112.55 per barrel, with Trump setting an 8 p.m. ET Tuesday deadline for Iran to fully reopen the Strait of Hormuz
• BCA Research warns oil supply buffers will be exhausted by the third week of April if the Strait remains closed, with prices potentially spiking to $200 per barrel and triggering a severe global recession
• Iran has only allowed 11 ship crossings on Sunday (a fraction of prewar traffic) and permitted Iraqi tankers to transit, potentially restoring 3 million barrels per day to the market

Summary: Oil Prices Rise Amid Strait of Hormuz Crisis

Key Developments:

Oil prices surged to near-conflict highs as President Trump's Tuesday 8 p.m. ET deadline for Iran to reopen the Strait of Hormuz approached. U.S. crude rose 1.3% to $112.55 per barrel on Monday, touching an intraday peak of $115.48. Trump warned Iran could be "taken out in one night," though indicated diplomatic progress, stating "I think it's going well" and offering potential reconstruction assistance if a deal is reached.

Current Situation:

Iran has partially eased restrictions, allowing 11 ship crossings through the Strait on Sunday—still a fraction of prewar levels. Iran reportedly granted Iraq clearance to transit oil tankers, potentially restoring Iraq's 3 million barrels per day production. However, Iranian officials demand a permanent war resolution, not just a temporary ceasefire, rejecting proposals from Pakistan, Turkey, and Egypt.

Market Implications:

BCA Research warns that oil supply buffers will be exhausted by the third week of April if the blockade continues. With 11.5 million barrels per day at risk, shortages are already emerging in Slovenia, Australia, and Bangladesh. Analysts project oil could spike to $180-$200 per barrel, potentially triggering severe global recession. Allianz Trade predicts that even if prices normalize to $85 by year-end, Europe could face recession and the U.S. a two-year slowdown.

Performance:

The United States Oil Fund ETF (USO) gained 0.7% Monday, up 9.2% in April and 101% year-to-date after a 55% March rally.