LONDON (Realist English). Global oil prices surged on April 20 amid a new round of escalation between the United States and Iran. After a brief pause linked to the reopening of the Strait of Hormuz, the conflict entered a sharper new phase, bringing a geopolitical premium back to the markets.
Benchmark North Sea Brent crude jumped more than 6% by the evening of April 20, reaching $96.49 per barrel. US light crude WTI rose nearly 8%, trading above $90 per barrel. The market has been volatile for the second consecutive month since the start of the US-Israeli military operation against Iran.
Diplomacy collapses: ship seizure and strait blockade
The dramatic events of the weekend triggered the new price spike. US President Donald Trump said US forces had seized an Iranian cargo ship attempting to break the blockade in the Gulf of Oman. In response, Tehran not only threatened retaliation but also officially refused to take part in a second round of peace talks in Pakistan, accusing Washington of violating the ceasefire.
Iranian authorities again imposed a full blockade of the Strait of Hormuz. According to Goldman Sachs analysts, the flow of oil through the strategic waterway has fallen to a record low of 2.1 million barrels per day, just 10% of normal levels.
On April 17, prices had fallen sharply when Iran declared the strait open, but by the weekend the situation had returned to square one, wiping out the so-called “diplomatic discount”.
Market on the edge: deficits and dwindling stocks
Seven weeks into the conflict, the global oil market faces the biggest supply shock in decades. Gulf states, unable to export crude, are being forced to idle wells. According to the International Energy Agency, the volume of halted production will reach 9.1 million barrels per day in April.
Experts at French bank Societe Generale warn that the supply deficit could hit 7.9 million b/d in April, while global stocks are melting fast: they have already shrunk by 190 million barrels since the start of the conflict.
Goldman Sachs has raised its inflation forecast, warning that higher fuel prices could slow US economic growth, which it has already downgraded from 2% to 1.2%.
Expert views: a path to $150?
Analysts at major banks and agencies differ on short-term forecasts but agree on one thing: the era of cheap oil is over.
Goldman Sachs believes that under a negative scenario, Brent could stay at $100 per barrel in the fourth quarter, and under a more severe scenario reach $115. The bank also notes weakening demand, especially for petrochemical feedstocks and jet fuel.
Macquarie sees potential for Brent to rise to $150 per barrel if the Strait disruption continues through April.
Morgan Stanley expects that even under an optimistic scenario, prices will stay in the $80-90 range this year, well above previous forecasts. The bank stresses that restoring normal production levels will take months, even if the strait opens tomorrow.
Al Salazar, managing director of analytics firm Enverus, notes that volatility will persist, and even if fighting stops, prices will have to stay high for longer to finance the replenishment of depleted stocks.
Thus, the world stands on the brink of a new energy crisis that will hit everyone, from household purchasing power to global economic growth. The coming days will show whether the parties can return to the negotiating table or whether the market faces a new, even more destructive oil price rally.
