Brent crude oil prices surged nearly 6% to surpass $90 per barrel as tensions escalated in the Strait of Hormuz, following renewed Iranian attacks on commercial vessels and a blockade of the shipping route. This spike reverses recent declines and highlights the fragility of the current geopolitical situation, which has seen an estimated 13 million barrels of daily production cut off from the market.

The likelihood of extending the existing ceasefire has diminished significantly after Iran accused the U.S. of violating terms and rejected upcoming peace talks. This breakdown in diplomacy exacerbates supply concerns and reflects a broader risk-off sentiment in the markets, contributing to falling stock and bond valuations while energy prices rise. The gap between physical and futures prices indicates extreme market strain, suggesting that any resolution may take weeks or months.

Market professionals should be prepared for continued volatility in crude prices, particularly if the blockade persists. A failure to resolve these tensions could push Brent prices toward the $100 per barrel mark, while any easing of restrictions may lead to a return to the $75-$80 range, albeit under optimistic scenarios.

Source: xtb.com