Oil Jumps 5.5% as Strait of Hormuz Closure Risk Adds $13B Weekly Cost

Oil Surges 5.5% as Strait of Hormuz Threat Erases 13% of Global Supply

• WTI crude closes at $99.64, Brent at $112.57, both posting weekly gains.
• StoneX warns 13% of world supply could stay offline for weeks even if war ends.
• Trump extends deadline on Iranian energy strikes to allow more talks.
• Overnight risk premium adds an estimated $13 billion to weekly import costs.

Weekend war anxiety pushes traders to price in a prolonged Hormuz shutdown.

STRAIT OF HORMUZ—New York—oil futures bolted higher Friday as traders priced in the possibility that the Strait of Hormuz could remain closed for weeks, sidelining 13% of global crude supply and sending West Texas Intermediate up 5.5% to $99.64 a barrel.

Despite President Donald Trump extending the deadline for strikes on Iranian energy targets to give diplomacy more time, Brent crude still climbed 4.2% to $112.57, capping a second straight weekly advance as investors bought protection against a supply shock.

“War anxiety is elevated ahead of the weekend,” StoneX chief commodities economist Arlan Suderman wrote in a client note. “Even ending the war tomorrow would leave supplies tight for some weeks or months while infrastructure is repaired.”

The 13% Supply Shock: Why Hormuz Still Dictates Prices

The 21-mile-wide chokepoint handles one in every five barrels consumed worldwide. When rumours swirl that tanker traffic could halt, the market’s first reflex is to price in the worst-case scenario.

StoneX calculates the immediate hit at 13% of global output—roughly 13 million barrels per day—if Iran were to mine the strait or if U.S. retaliatory strikes cripple nearby export facilities. That dwarfs the 5% shortfall after Russia’s 2023 price-cap sanctions took hold.

From premium to panic

Friday’s 5.5% WTI jump added $5.20 to each barrel, lifting the contract to $99.64. Brent’s 4.2% gain equates to an extra $4.54 per barrel, pushing the global benchmark to $112.57. Spread traders noted the Brent premium over WTI narrowed to $12.93, its tightest since October, a sign European refiners are paying up for Atlantic basin barrels they can still reach.

The forward curve tells the same story: December 2025 Brent futures settled above $95, a structure known as backwardation that rewards holders of physical crude and signals traders expect scarcity to linger.

Every $10 increase in Brent adds an estimated $65 billion annually to the world’s import bill, according to Oxford Economics. With prices now $14 above last month’s average, the macro hit is roughly $90 billion—equal to the annual GDP of Slovakia.

Energy Aspects analyst Richard Bronze warns the market is still under-pricing duration risk. “Infrastructure repairs take months, not days,” he told clients. “If Hormuz is offline for six weeks, global inventories will draw by 250 million barrels—more than the entire OECD emergency stockpile.”

The next flashpoint: Sunday evening in Tehran, when Iran’s navy typically announces exercises. Traders will watch for NOTAMs (Notice to Airmen) that could foreshadow live-fire drills near the shipping lane.

Why Trump’s Deadline Extension Didn’t Calm the Market

President Trump gave diplomacy an extra 48 hours by pushing back the deadline for U.S. strikes on Iranian energy ports. Markets, however, treated the extension as evidence that talks are stalling, not progressing.

“Markets wanted a cease-fire, not just more time,” says Helima Croft, head of global commodities strategy at RBC Capital Markets. “The longer Hormuz stays open only on paper, the more front-month futures will price in a physical shortage.”

Diplomacy vs. deterrence

Secretary of State Marco Rubio told reporters the pause was meant to let European and Arab mediators present a broader de-escalation plan. Oil traders interpreted the wording—”broader”—as code for an agreement that must also cover Iran’s nuclear enrichment, not just tanker passage.

History shows energy investors are right to be sceptical. The 2019 drone attacks on Saudi Aramco’s Abqaiq facility knocked out 5.7 million bpd for 11 days. Brent spiked 20% in minutes even though Washington and Riyadh signalled a measured response. Today the potential outage is twice as large and strategic reserves are 30% lower than five years ago.

StoneX’s Suderman notes that algorithmic funds now hold a near-record net-long position equivalent to 650 million barrels. Any headline that implies Hormuz could reopen risks a violent unwind, but until then the path of least resistance is higher.

Friday’s Commitment of Traders report from the CFTC shows money-manager longs in WTI rose 7% week-on-week, the fastest clip since the Ukraine war began. Short-covering added another 4,700 contracts, underscoring how few bears remain.

Weekly Scorecard: WTI Up 1.3%, Brent 0.3%, but Volatility Soars

Despite Friday’s fireworks, crude’s weekly gains look modest. WTI advanced 1.3% over five sessions, Brent only 0.3%. The calm surface masks violent intraday swings: average true range—a proxy for volatility—hit $4.20, the highest since the 2022 Ukraine invasion.

Options markets echo the tension. Implied volatility on one-month Brent calls struck at $120 jumped to 42%, outstripping even the 2021 Evergrande crisis. Dealers hedging upside exposure are forcing spot prices higher through gamma squeezes each time Brent touches a new strike.

Refiners rush to lock supply

U.S. Gulf Coast refiners booked 14 very-large-crude-carriers (VLCCs) this week, the most since 2020, according to Petro-Logistics. Each vessel holds 2 million barrels, suggesting they expect at least four weeks of disrupted shipments. Freight rates on the Houston–Singapore route jumped 18% to $4.83 per barrel.

European plants face an even tighter squeeze. North Sea cargoes for March loading traded at $2.50 above dated Brent, the strongest premium since Libya’s 2011 civil war. With Urals barrels sanctioned, many German refiners now bid aggressively for West African grades, lifting Nigerian Bonny Light to a three-year high versus Brent.

Retail impact is already visible. AAA data show U.S. gasoline averaged $3.49 per gallon Friday, up 11¢ in a week. Every $1 rise in Brent translates into a 2.4¢ increase at the pump within 14 days, according to the EIA. If current futures hold, $4 gasoline could return by Memorial Day.

Is $100 the New Floor? What Analysts Watch Next

With WTI back above $99, traders debate whether triple-digit oil is here to stay. Goldman Sachs raised its summer peak forecast to $105, citing 1.5 million bpd of lost OPEC spare capacity if Hormuz stays shut. JPMorgan goes further, modelling $150 should the strait close for three months.

Yet bears point to a fragile demand backdrop. China’s January crude imports fell 3% year-on-year, the first decline since 2020. U.S. gasoline demand on a four-week rolling basis is down 2.1%, per the EIA. High prices could accelerate adoption of EVs and efficiency, capping upside.

Key levels to watch

Technical analysts eye $100.55, the 200-week moving average. A weekly close above it would open the 2022 high of $130.50. Support sits at $92.80, Friday’s pre-Hormuz low. A break below that would signal the risk premium is evaporating.

Fund flows matter too. ETF investors yanked $340 million from U.S. oil funds this week, the biggest outflow since September. If institutional money returns, net speculative length could top 700 million barrels, amplifying any surprise outage.

Bottom line: the market is one missile strike—or one diplomatic breakthrough—away from a $20 swing. Until visibility improves, front-month futures will stay glued to headline algos.

From Field to Forecourt: How $100 Oil Hits Consumers

Every $10 increase in crude adds roughly 24¢ to U.S. gasoline within two weeks. At $112 Brent, the rule of thumb implies a national average of $3.85 per gallon by early March, surpassing last year’s peak and erasing the 2025 payroll tax cut for the average commuter.

Airlines feel it faster. Jet fuel in New York harbour traded at $3.26 per gallon Friday, up 18% month-to-date. Delta Air Lines said on its earnings call that each 5¢ increase in jet fuel costs the carrier $75 million annually. If prices hold, industry-wide losses could top $4 billion this summer.

Global ripple effects

Emerging markets suffer most. India, the world’s third-largest importer, spends 1.2% of GDP on crude. A $15 price spike widens its current-account deficit by 0.4%, according to Moody’s. Turkey and South Africa face similar pressures, risking currency selloffs that could force central-bank rate hikes.

In the U.S., high gasoline prices historically shave 0.1% off GDP growth for every 10¢ rise sustained over a year. With the Fed on hold, that drag could tilt expectations for 2025 growth below 1.5%.

One hedge: U.S. shale. Drillers added five rigs this week, the most since October. But output gains lag six months, too late to prevent a spring price spike.