Oil Prices Reach Low Boil Ahead Of Strait Of Hormuz End Game

• U.S. crude oil jumped 3% to nearly $116 per barrel from pre-conflict levels below $70, with depleted inventories limiting supply cushions despite some easing of Iran's Strait restrictions
• BMO Capital Markets expects oil to settle at $75-$85 per barrel if the conflict ends by late April, but warns prices could soar to $150-$200 if the war escalates and the Strait remains closed
• Iran exempted 'brotherly' Iraq from shipping restrictions, potentially returning 3 million barrels per day to market, though shipping through the Strait remains at a fraction of prewar levels

Summary

Key Development:

Crude oil prices surged to their highest levels since the Iran conflict began, with U.S. crude rising 3% to $115.79 per barrel on Tuesday morning (from pre-conflict levels below $70). This comes as President Donald Trump's 8 p.m. ET deadline approaches for Iran to release control of the Strait of Hormuz.

Military Action:

The U.S. conducted over 50 strikes on Iran's Kharg Island, a major oil export terminal, though oil infrastructure wasn't directly targeted. Trump threatened to bomb Iran to the "Stone Ages," while Iran's Revolutionary Guard warned it would "deprive the U.S. and its allies of the region's oil and gas for years."

Market Analysis:

BMO Capital Markets analyst Randy Ollenberger projects two scenarios: de-escalation could see oil settle at $75-$85 per barrel, while continued conflict could push prices to $150-$200. Economists estimate each sustained $10-per-barrel increase reduces economic growth by 0.1%.

Strait of Hormuz Status:

Despite some easing—Iran exempted "brotherly" Iraq's 3 million barrels per day from restrictions—the Strait remains largely blocked. MarineTraffic reported only 11 crossings on Sunday versus normal pre-war traffic, with two Qatari LNG vessels forced to reverse course Tuesday.

Equity Markets:

The S&P 500 fell 0.9% Tuesday morning, though it remains 4.2% above its March 30 war-low and 5.3% below its January 27 all-time high. The United States Oil Fund ETF gained 2.5%, up 12% in April after a 55% March rally.

Outlook:

Analysts expect the conflict to wind down by end-April, citing steep economic costs of escalation.