Israel-Iran Crisis: How Vital Is the Strait of Hormuz for the Oil Market?

Middle East Situation

Economic

Summary:

Tensions between Israel and Iran have raised fears of disruption in the Strait of Hormuz, a vital route for global oil and LNG.

The flare-up of tensions between Israel and Iran has reignited concerns over the security of the Strait of Hormuz, a vital artery for the global energy market.

This narrow stretch of water, just 29 nautical miles wide at its tightest point, funnels nearly a third of the world’s seaborne oil and a fifth of global LNG.

The U.S. Energy Information Administration (EIA) calls it the "world’s most important oil chokepoint," underlining the strategic importance of the passage that links the Persian Gulf with the Gulf of Oman and the Arabian Sea.

Investors and analysts are weighing the implications of a potential disruption in this narrow but critical waterway. What happens if the Strait of Hormuz is suddenly sealed off?

Israel-Iran Crisis: How Vital Is the Strait of Hormuz for the Oil Market?_1

Strait of Hormuz Map

Why is the Strait of Hormuz crucial for global energy market?

Following Israeli attacks on Iran, Iranian officials have raised the spectre of closing the Strait—triggering a sharp surge in crude prices.

According to the International Energy Agency (IEA), around 20 million barrels per day (mb/d) of crude oil and refined products passed through the Strait of Hormuz in 2023, representing nearly 30% of total global oil trade.

Most of this volume—around 70%—was bound for Asia, with China, India and Japan among the largest recipients.

While alternative pipeline infrastructure exists, it is limited. The IEA estimates that only 4.2 mb/d of crude oil can be rerouted via overland routes, such as Saudi Arabia’s East-West pipeline to the Red Sea and the UAE’s Abu Dhabi Crude Oil Pipeline to Fujairah. This capacity represents barely one quarter of the typical daily volume transiting the Strait.

“Any prolonged crisis in the Strait of Hormuz would not only disrupt shipments from key Gulf producers—Saudi Arabia, the UAE, Kuwait, Iraq and Qatar—but also make inaccessible the majority of the world’s spare production capacity, which is concentrated in the Persian Gulf,” the IEA warned in a report.

LNG markets are even more exposed to potential disruptions. All LNG exports from Qatar—the world’s second-largest LNG exporter—and the UAE must pass through the Strait. The IEA reports that 90 billion cubic metres (bcm) of LNG transited the Strait in the first ten months of 2023, equal to 20% of global LNG trade.

With no viable alternative routes for LNG exports from Qatar or the UAE, any maritime closure would severely tighten global supply. Around 80% of these LNG volumes are destined for Asia, while Europe receives roughly 20%, meaning disruptions would exacerbate competition between regions, especially in a tight market.

“The sheer volume of oil passing through the Strait and the scarcity of alternative routes means even brief disruptions would have significant consequences for the global market,” the IEA stated.

How far could oil rise if Strait of Hormuz is blocked?

While a full closure remains a low-probability scenario, analysts agree that the threat alone is enough to inject volatility into energy markets.

Crude oil prices surged by 13% last week amid escalating tensions between Israel and Iran. Although prices have since eased slightly after reports confirmed that Iranian energy infrastructure remained untouched by Israeli strikes, the risk of further escalation—and potential disruption to global energy flows—remains elevated.

In response, Wall Street analysts have been quick to assess the possible fallout from any interruption of oil and gas shipments through the Persian Gulf, particularly the Strait of Hormuz.

Goldman Sachs warned that an extreme risk scenario involving a prolonged closure of the Strait could push prices well above $100 per barrel.

The investment bank estimates that Iran currently produces around 3.6 million barrels per day (mb/d) of crude oil and 0.8 mb/d of condensates, with total seaborne exports averaging 2.1 mb/d so far this year—most of it heading to China. T

ING’s head of commodities strategy, Warren Patterson, indicates that the market has begun pricing in a substantially higher geopolitical risk premium in light of recent developments.

Patterson stated that any disruption to Iranian oil flows would be enough to eliminate the expected oil surplus for the fourth quarter of 2025, likely pushing Brent crude prices toward $80 per barrel.

Yet, the analyst warns that a more severe scenario—such as a disruption of shipping through the Strait of Hormuz—could be far more consequential.

“Almost a third of global seaborne oil passes through this chokepoint,” he noted. “A significant disruption to these flows could drive prices up to $120 per barrel, particularly because most of OPEC’s spare capacity is located in the Persian Gulf and would be inaccessible under such conditions.”

"This escalation also has ramifications for the European gas market," he added.

What to expect next?

The Strait of Hormuz is more than just a shipping lane—it’s a lifeline for global energy.

With no easy detours for oil or LNG flows, its vulnerability puts markets on edge every time tensions flare in this region. A full closure of the Strait may still seem a remote event, but the mere threat is enough to rattle markets and keep oil prices elevated.

As Iranian and Israeli forces continue to exchange strikes, the risk of miscalculation looms large. In a region where diplomacy is fragile and stakes are high, one wrong move could turn a regional conflict into a global energy crisis.

Source: Euronews

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Glendon

Commodity

Political

The conflict roiling Iran poses rewards and peril for fellow members of the OPEC+ oil cartel.

The price rally triggered by Israel’s offensive reversed the slump that the Organization of the Petroleum Exporting Countries and its allies caused in recent months by ramping up production. That should shore up revenues for the coalition.

Now there’s the question of what OPEC+ should do next.

So far, the Israeli onslaught has left Iran’s crude production and export facilities unchanged. OPEC Secretary General Haitham Al-Ghais has said there’s no immediate need for the group to respond.

Nonetheless, group leader Saudi Arabia is intent on swiftly reviving halted production and regaining the market share the alliance ceded to rivals during the past few years.

Riyadh pushed through three monthly group increases of 411,000 barrels a day — triple the initially scheduled amount — in quick succession. During the next few weeks, OPEC+ members will decide whether to approve another hike for August.

Frothy prices have the potential to assuage some of the resistance the Saudis have encountered from partners such as Russia, thus easing approval of another boost. The market upturn may even embolden the kingdom to press for a bigger increase.

But there are, of course, also hazards for OPEC+.

Given the lack of any supply disruption, a decision to expedite production increases the risk of swelling the global oil surplus that Wall Street analysts see on the horizon.

Current hostilities could expand and hit energy infrastructure across the Middle East.

Also, Iran could retaliate against Israel by encouraging proxies such as the Houthis in Yemen to harass tankers in the region or impede the critical Strait of Hormuz waterway.

If Iranian oil flows are disrupted, the Saudis and other Gulf states will likely come under pressure from US President Donald Trump to compensate for those losses by tapping their spare capacities.

That possibly may put the Gulf nations’ energy assets in the crosshairs. When the Saudis backed the crackdown on Tehran during Trump’s first term, their critical Abqaiq processing plant suffered a paralyzing bombardment claimed by the Houthis.

China churned out less steel in May compared with the previous year as mills responded to the government’s pledge to cut production. Output declined 6.9% to 86.55 million tons, pushing the total 1.7% lower for the first five months. It’s the first year-on-year contraction in the monthly figure since Beijing vowed to address the industry’s glut during its annual policy meeting in March, according to the statistics bureau.

Oil erased another large increase, with traders monitoring attacks between Iran and Israel that have spared critical infrastructure for now. Brent traded down as much as 1.3% after leaping higher at the open.

The United Nations atomic watchdog convened an emergency meeting to assess Israel’s attacks on Iranian nuclear facilities and to discuss the disruptions to its oversight of the Islamic Republic’s stockpile of near-bomb grade uranium.

Some oil tanker owners and managers have paused offering their vessels for Middle Eastern routes since Friday as they assess the risks from the Israel-Iran conflict, fueling concerns over export flows from the region.

Abu Dhabi National Oil Co. made an $18.7 billion offer for Australian fossil fuel producer Santos Ltd., an audacious overseas move by the Middle Eastern company as it seeks to expand production of liquefied natural gas.

Nippon Steel Corp. shareholders are weighing the benefits of the $14.1 billion acquisition of United States Steel Corp., with a key short-term concern being how to finance the all-cash deal and promised investments.

Five Key Charts to Watch in Global Commodity Markets

Monday: OPEC monthly oil market report; Energy Asia conference, Kuala Lumpur (through Wednesday); China industrial output for May; Asia Pacific Precious Metals Conference, Singapore (through Tuesday); USDA export inspections for corn, soybeans, wheat

Tuesday: International Energy Agency’s monthly oil market report and Oil 2025 medium-term outlook; American Petroleum Institute’s weekly report on US oil inventories

Wednesday: US Energy Information Administration’s weekly reports on oil, natural gas and ethanol inventories; Japan Energy Summit and Exhibition, Tokyo (through Friday); Australian Energy Week, Melbourne (through Friday)

Thursday: AGM for Helleniq Energy Holdings SA

Friday: Baker Hughes Co. weekly rig count report; USDA total milk production

Source: Bloomberg Europe

Risk Warnings and Disclaimers

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Michelle

Commodity

Opec has kept its global oil demand growth forecasts for this year and next unchanged.

The group sees oil consumption growing by 1.29mn b/d to 105.13mn b/d in 2025 and by 1.28mn b/d to 106.42mn b/d in 2026, according to its latest Oil Market Report (OMR) released today.

These projections remain markedly higher than the IEA's forecasts.

Opec upgraded its first quarter demand estimate, based on actual data, but said this increase was offset by lower expectations of oil demand in key consuming countries China and India in the second quarter and later in the year, mostly driven by US trade policies.

In terms of supply, Opec downgraded its 2026 non-Opec+ liquids supply growth forecasts for a third month in a row, mainly driven by the effects of lower oil prices on US shale producers. Opec now sees non-Opec+ liquids supply growth growing by 730,000 b/d in 2026, compared with 800,000 b/d in last month's OMR. Opec expects US liquids output growth of 210,000 b/d, down from 460,000 b/d in March.

But the group kept its 2025 non-Opec+ liquids supply growth forecast unchanged at 810,000 b/d.

Opec made no reference to the ongoing conflict between Israel and Iran in its report, suggesting the hostilities have not affected its supply and demand balances. The Opec secretariat last week criticised the IEA for saying it was ready to release emergency oil stocks if necessary. Opec said there were currently "no developments in supply or market dynamics that warrant unnecessary actions" and that such statements raise "false alarms" and project "market fear."

Opec+ crude production — including Mexico — rose by 180,000 b/d to 41.23mn b/d in May, according to an average of secondary sources that includes Argus. Opec puts the call on Opec+ crude at 42.7mn b/d in 2025 and 43.2mn b/d in 2026.

Source: Argus Media

Risk Warnings and Disclaimers

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Warren Takunda

Economic

London stocks had extended gains by midday on Monday despite the conflict between Iran and Israel entering its fourth day.

The FTSE 100 was 0.4% firmer at 8,889.19.

Russ Mould, investment director at AJ Bell, said: "European shares were surprisingly resilient against a backdrop of uncertainty.

"Helping to prop up FTSE 100 was continued strength in oil prices as tensions remained high in the Middle East. Crude oil rose 1.1% to $72 per barrel, driving shares in FTSE heavyweights BP and Shell and taking the broader market upwards in the process.

"Global oil prices jumped last week after Israel attacked Iran, raising concerns about major disruptions to supply. Despite a weekend of violence between the two countries, investors showed no signs of panicking, judging by movements in financial markets on Monday. Future prices imply a positive day for Wall Street when US markets open later on.

"The gold price is often a measure of investor sentiment, going up when people are worried and going down when they’re optimistic. The precious metal slipped 0.6% to $3,432 per ounce which indicates that investors remain alert to ongoing geopolitical tensions but they’re not reaching for their tin hats.

"The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further."

Away from geopolitics, all eyes will be on central bank policy announcements this week, with decisions due from the Bank of Japan on Tuesday, the Federal Reserve and Riksbank on Wednesday and Norges Bank, the Bank of England and the Swiss National Bank on Thursday.

"We expect all but the SNB to stay on hold and expect the SNB to cut the rate 25bp to 0%," Danske Bank said.

On the macro front, there was some encouraging news from China, where figures from the National Bureau of Statistics showed that retail sales growth jumped to a 15-month high in May as national holidays and government efforts to encourage spending despite additional trade tariffs from the US.

Retail sales surged 6.4% year-on-year in May to 4.13trn yuan ($575bn), following 5.1% growth in April. That was well ahead of the 5.0% consensus estimate and the strongest rate of growth since December 2023, as urban retail sales grew 6.5% and rural sales gained 5.4%.

The acceleration was thought to be a result of increased spending during Labor Day (1 May) and the Dragon Boat Festival (31 May), while stimulus packages by Beijing to promote domestic consumption also helped as the economy began to feel the impacts of its trade war with Washington.

Retail sales over the first five months of the year totalled CNY20.32trn, up 5% over last year.

On home shores, the latest house price index from Rightmove showed that house prices eased in June following stronger-than-expected growth in April and May.

Prices eased by 0.4% in June, compared to a 0.6% uplift in May and April’s 1.4% jump. The average asking price is now £378,240.

Rightmove said the fall was unusual for June. The average June increase has been 0.4% over the last ten years.

However, it noted that the dip followed "stronger-than-expected price growth in April and May, and appears to be part of a delayed response to increased stamp duty tax".

Changes to stamp duty thresholds came into effect in April, causing a rush of sales as people hurried to complete ahead of the deadline.

Agreed sales were 6% higher year-on-year in June, the highest number of sales agreed in any month since March 2022.

Rightmove’s Colleen Babcock said: "It appears that we're now seeing the decade-high level of homes for sale, and the recent stamp duty increases in England, have a delayed impact on new sellers' pricing.

"Agents have been telling us that sellers need to set a competitive price to have a better chance of finding a buyer in the current market, and it looks like many are listening and responding to that message.

"Such realistic pricing will remain key in the coming months."

Year-on-year, house prices rose 0.8% in May.

In equity markets, gambling and sports betting group Entain surged to the top of the FTSE 100 after it upgraded its guidance for BetMGM following a strong first half from the US division.

Asia-focused Standard Chartered and Prudential were in the black after the upbeat Chinese retail sales data.

Oil majors BP and Shell gushed higher as oil prices rose again amid tensions in the Middle East.

Shares in Spectris rallied after it rebuffed a takeover approach from US private equity giant KKR, fuelling hopes of a potential bidding war. The British manufacturer of high-tech scientific instruments is already in discussions with American buyout firm Advent International regarding a possible cash offer of £37.63 per share, or £4.4bn including debt.

Metro Bank shares sparked following reports over the weekend that it has been approached by private equity firm Pollen Street Capital about a possible takeover.

Source: Sharecast

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Glendon

Political

Whatever their differences, the US and Israel share one overriding priority when it comes to Iran: to prevent the regime from acquiring a nuclear weapon. Devastating Israeli airstrikes have both delayed that possibility and, over the longer term, made an Iranian attempt to “break out” more likely. The US must focus on what it can do to lower those odds.

Israel’s initial surprise attack killed several high-ranking generals and nuclear scientists and knocked out many of Iran’s air defenses. Israeli forces have targeted the country’s three main nuclear sites at Natanz, Isfahan and Fordow, apparently crippling its only uranium-conversion facility. The strikes widened over the weekend to include gas fields and other energy-related targets, even as Iranian missiles hit Tel Aviv and Haifa.

How much further Israel can degrade Iran’s nuclear infrastructure without US bunker-busters — needed to penetrate the most deeply buried sites — remains unclear. The program has likely been set back months, perhaps more.

But, assuming the fighting doesn’t lead to the regime’s collapse, the assassinated generals and physicists will be replaced, probably by even more hawkish successors. Those officials will have every incentive to accelerate efforts to develop a bomb secretly, just as Saddam Hussein initially did after Israeli F-16s destroyed Iraq’s Osirak nuclear reactor in 1981.

Even if Iran returns to the negotiating table, it will thus be even harder to trust any pledges the regime makes. To be credible, any new nuclear agreement would require inspections that are more intrusive and persistent than ever before. Any enrichment capability, even the low levels required for civilian use, will almost certainly have to be eliminated.

Why would Iran agree to such conditions now, after refusing for years? Much depends on how long the fighting continues and how much more damage it suffers. But the extent to which Israeli intelligence has penetrated the country’s security establishment is obvious. If the regime attempts to race for the bomb in the future, it can’t be sure it won’t be exposed — in which case the US can lend its B-2 bombers to the effort to destroy underground enrichment sites.

Nor can Iranian leaders be sure they will themselves survive a new round of strikes. Their air defenses will be difficult to restore. Meanwhile, Israel has defanged most of their proxies across the region. Erstwhile allies such as Russia and China have offered only symbolic support. The regime remains deeply unpopular with its own citizens, and the country’s economy is a shambles.

The billions in oil revenue the regime sacrificed to sanctions to pursue its nuclear ambitions clearly failed to buy it security. US officials should underscore that further attempts will be equally unsuccessful.

As the US waits for Iranian leaders to accept this reality, it should be working with its Group of Seven and Gulf allies, possibly even Russia and China, to unify around a set of demands to verifiably eliminate the possibility of an Iranian bomb. It should continue helping defend Israel against retaliation while striving to prevent the conflict from widening.

The uncomfortable fact remains that diplomacy — however unlikely it may seem at the moment — is the only path to security and a sustainable peace in the region. If a strong nuclear deal was desirable before this conflict, it’s vital now.

Source: Bloomberg Europe

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Gerik

Economic

Rising Yields Reflect Persistent Geopolitical and Inflation Fears

The recent escalation between Israel and Iran has triggered another bout of selling pressure on US Treasuries, with the 10-year yield jumping nine basis points since Friday to 4.42%. The reaction is not unprecedented; historical analysis by Bloomberg shows that during similar flare-ups in April 2024 and October 2024, yields spiked and remained elevated for at least a month. The current surge coincides with a sharp increase in crude oil prices, reviving fears of sustained inflation.

Carlos Casanova of Union Bancaire Privee notes that the market is behaving in line with heightened geopolitical anxiety, shifting into perceived inflation hedges like oil while simultaneously pushing yields higher. The dual forces of rising energy costs and diminished confidence in long-term US fiscal stability are making Treasuries less attractive, especially at longer maturities.

Curve Steepening as Short-Term Rates Lag

While the entire Treasury curve has shifted upward, the longer end has been more sensitive to recent events. Two-year yields have climbed eight basis points since Thursday, but the more pronounced increase in 10-year yields has steepened the curve—a reversal from previous months dominated by inversion due to short-term monetary policy expectations.

Wei Liang Chang from DBS Group notes that steepening pressures may persist as investors anticipate greater military spending and fiscal stress ahead. The market is increasingly pricing in both higher-for-longer inflation and long-term debt concerns, especially in the context of the Trump administration’s aggressive trade policies and a growing federal deficit.

Risk Premiums Rise as Confidence Wavers

One of the deeper implications of this selloff is the growing demand for higher risk premiums from bond investors. With both geopolitical and domestic fiscal uncertainties rising, investors are less willing to accept low yields in exchange for long-term lending to the US government. This trend could persist even if short-term inflation indicators soften, as structural concerns—such as sticky energy prices and unpredictable foreign policy—continue to cloud long-term forecasts.

The CBOE 10-Year Treasury Note Index (TNX) confirmed this sentiment, closing at 4.4240 on June 13, up over 1.5% from the previous day. With investors now eyeing upcoming central bank meetings and the G7 summit for further signals, the Treasury market remains on edge.

Unless the Israel-Iran conflict de-escalates swiftly and oil prices stabilize, the Treasury selloff could become a prolonged theme throughout the summer. Add to this the inflationary overhang from tariffs and fiscal expansion, and the case for continued upward pressure on long-term yields strengthens. The steepening curve may persist, and the risk premium demanded by global investors for holding US debt is unlikely to diminish in the near term.

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Michelle

Cryptocurrency

Litecoin (LTC) price has been quietly consolidating beneath key moving averages, and the charts suggest a major move is coming. As of June 16, 2025, LTC price is trading around $86.64, showing slight strength, but traders are still hesitant as the coin battles resistance from above. Let’s dive into the daily and hourly charts to understand what’s next and calculate the breakout potential.

Litecoin Price Prediction: Is LTC Price Preparing for a Reversal?

LTC/USD 1 Day Chart- TradingView

The daily chart shows that Litecoin recently bounced off the $80 support level and is now trading just below a key resistance zone between $87 and $89, which coincides with the 20-day and 50-day simple moving averages. Notably, the 100-day and 200-day SMAs are still above the current price, sitting around $88.33 and $101.69, acting as resistance walls.

From a Heikin Ashi perspective, there is a gradual shift from bearish candles to smaller-bodied candles, signaling the selling momentum may be losing strength. However, a clear bullish reversal pattern hasn't been confirmed yet. If LTC breaks and holds above $89 on strong volume, we may see a swift move to the $96–$100 range.

What Does the Hourly Chart Reveal?

LTC/USD 1 hr Chart- TradingView

Zooming into the 1-hour chart, Litecoin price is consolidating in a tight range between $86 and $87.50. The short-term moving averages (20, 50, and 100 SMA) have flattened out, while price is slightly nudging above them—hinting at a possible bullish crossover. The 200 SMA at $87.97 remains the main obstacle in the short-term.

If LTC price breaks the 200 SMA on this timeframe and confirms the breakout with a retest, we could expect a quick run-up toward $92, where historical hourly resistance lies. Above that, $96 and $100 are the next Fibonacci extension targets.

What Do Fibonacci Levels Say?

The daily chart has drawn Fibonacci levels from the previous high near $112 to the recent low near $72. Key levels to watch:

Fib 0.382 is around $88.50, very close to current resistance
Fib 0.5 sits near $92.00
Fib 0.618 is around $96.00

A breakout above $88.50 and sustained hold above $92 would signal a medium-term trend reversal and invite larger bulls.

Let’s use the Fibonacci target calculation to estimate the potential gain:

If LTC breaks above $88.50 (Fib 0.382) and moves to $96.00 (Fib 0.618),Gain = (96 - 88.50) / 88.50 = 7.5 / 88.50 ≈ 8.47%

This represents a healthy short-term opportunity if volume supports the breakout.

Is There Downside Risk?

Yes, if Litecoin price fails to break above $88.50 this week, sellers might retest $80. A daily close below $80 would open up a slide toward $72 and even $65. Those levels are marked by lower Fib retracements and past price congestion zones.

The 200-day moving average at $101 is also far above the current price, meaning that Litecoin price is still technically in a downtrend. A breakout must be confirmed on higher timeframes to validate a macro recovery.

Litecoin Price Prediction: Bullish or Bearish?

In the short term, Litecoin price looks neutral-bullish. It’s showing early signs of strength on the hourly chart, but the real test is breaking above the $88.50–$89.00 resistance band. If that happens, $92 and $96 are achievable targets. A retest of $100 is likely only if BTC remains above $70K and broader altcoin sentiment improves.

In contrast, failure to clear resistance may push LTC price back to $80 and below. Traders should watch volume spikes closely and monitor the daily close over the next 2–3 sessions.

Final Thoughts

A breakout above $89 could fuel a move to $96–$100. But failure at current levels may drag LTC price back to $80 or lower. The next 48 hours are crucial.