The protective mechanism of the global energy market, which for years smoothed out price shocks, is rapidly losing its effectiveness. On Wednesday, the North Sea Brent blend confidently surpassed the $85 per barrel mark, while American WTI rose above $80. Both benchmark grades have shown steady growth for the third consecutive day, and this is not just short-term volatility.
The main catalyst is the escalation in the Strait of Hormuz. The conflict between the US and Iran has entered a new, hotter phase. However, as my observations show, the true reason for the panic in the markets lies deeper: the world has almost exhausted its reserve of spare production capacity. That very "margin of safety," which allowed for compensating supply disruptions over several months, is now almost completely used up.
Strategic Reserve — The Last Line of Defense
Throughout the conflict, Washington has actively used the Strategic Petroleum Reserve (SPR), releasing millions of barrels onto the market to curb the price explosion. Each new round of hostilities was accompanied by another tranche from the reserves. But this "safety cushion" no longer works as before. The analysts I discussed the situation with agree: if the US and Iran continue on the path of escalation rather than seeking a compromise, oil could sharply rise in price. Experts warned about this as early as the G7 meeting, where the option of releasing up to 400 million barrels from reserves onto the market was discussed. ExxonMobil's top management also recently stated that global oil reserves are shrinking at an alarming rate.
Trump Changes Tactics: From Blockade to Ultimatum
US President Donald Trump is raising the stakes. In an interview, he hinted that strikes on Iran could intensify as early as next week if Tehran does not return to negotiations. Targets could include power plants and bridges. Iran, for its part, does not rule out imposing its own fees on vessels passing through the Strait of Hormuz. Notably, Trump abandoned plans to impose a 20% fee on cargo, instead offering Gulf states trade and investment agreements. However, on the same day, the US resumed the naval blockade of Iranian ports — a direct continuation of attempts to establish control over the strait.
Shipping companies reacted instantly. According to MarineTraffic, only 57 vessels passed through the Strait of Hormuz over the past weekend — half as many as a week earlier. For comparison, before the active phase of hostilities began in February, daily traffic was around 130 large-tonnage vessels.
Wall Street Prices in $100
Bart Melek, head of commodity strategy at TD Securities, believes that a move towards $100 is "quite possible if it becomes evident that the oil deficit is a real and growing risk." The US Department of Energy, however, disagrees, stating that on the eve, 8.5 million barrels passed through the strait with military support — a normal supply volume. But I would not advise relying too heavily on these figures: they may be "indicative" rather than reflecting the real picture.
My conclusion: the rise in oil prices could seriously complicate the fight against inflation. Previously, analysts expected the June CPI report to record a further slowdown in price growth, aided by lower fuel costs. Now, the dynamics will depend solely on Trump's next moves and Tehran's decisions. The market is entering a zone of turbulence, and the only scenario that could bring prices down is a real truce, not its imitation.