Oil prices surged to their highest levels in five months on Monday following Iran's parliamentary approval of a motion to potentially close the Strait of Hormuz, a critical chokepoint for global energy supplies.
Brent crude increased by 0.8%, reaching $77.62 per barrel, while West Texas Intermediate rose to $74.42. Over the weekend, prices briefly soared to as high as $81 before settling down. The escalation has raised concerns over possible disruptions to approximately 20% of the world's oil and gas shipments passing through the narrow waterway, which is only 21 miles wide at its narrowest point.
Iran's Supreme National Security Council will now decide on implementing the blockade, according to Iranian state media. Analysts warn that if Iran proceeds with closing the Strait, oil prices could spike to $120 per barrel, reflecting the significant supply risk.
Market analysts, including Deutsche Bank's Jim Reid, highlighted the increasing likelihood of a closure, with Polymarket's odds rising from 10% to over 32% in recent days.
Reid noted that prior to fears of Israeli strikes, oil was trading around $68, and the potential closure could push prices to $85 or higher.
The situation remains fluid, with global markets closely monitoring developments, as tensions in the region threaten to destabilize energy supplies and impact global prices significantly.
