Hormuz Chokehold Returns: Brent Cracks $90 as Tankers Stop Running

The Strait of Hormuz is running dry. Nine consecutive nights of US airstrikes on Iran have effectively shuttered the world’s most critical energy chokepoint, pushing Brent crude back above $90 a barrel for the first time since early June and exposing a global market with far less cushion to absorb the shock than it had just two months ago.

Only four vessels transited the Strait on Sunday, a fraction of the dozens that typically pass through daily. Iran’s Revolutionary Guards said two oil tankers were destroyed by mines overnight and warned the route would remain unsafe for oil and gas shipments as long as US military operations continue. LNG shipments through Hormuz have ground to a halt, and tanker operators are refusing to send ships into a war zone where they may be stopped, mined, or attacked.

The closure marks the second disruption of Hormuz in this conflict. A ceasefire, memorialized in a June 17 memorandum of understanding, had briefly reopened the strait and allowed oil prices to fall close to pre-war levels in early July. President Trump declared that ceasefire “over” on July 8 after Iran struck three ships in the Strait and the US retaliated. Supreme Leader Ayatollah Khamenei has called the ceasefire “worthless.” What followed has been a steady escalation: US strikes hitting logistics infrastructure and maritime capabilities across multiple Iranian cities, Iranian retaliation against a power and water desalination plant in Kuwait, and Tehran’s claims of targeting US forces in Syria and Bahrain.

The cushion is gone

What makes this second Hormuz shutdown more dangerous than the first is the depletion of the buffers that absorbed the initial shock. The International Monetary Fund identified three factors that kept oil from hitting doomsday $200-per-barrel forecasts during the spring: demand compression in Asia as prices rose, faster-than-expected production growth outside the Persian Gulf (2 million barrels per day above 2025 levels), and the release of commercial inventories and strategic reserves. All three buffers are now smaller. “What cushioned the initial blow this time is that energy markets had room to maneuver and absorb it,” IMF economists Azim Sadikov and Jean-Marc Natal wrote. “As tensions flare again in the Strait of Hormuz, that room is now smaller and shrinking further as spare capacity has been deployed, demand has compressed, and inventories have been drawn down.”

The IMF estimates that over 1.1 billion barrels of crude — roughly 10 days of typical global consumption — failed to reach the market because of the conflict as of late May. At the same stage of disruption, the agency noted, this exceeds the supply shortfalls of the 1973 oil shock, the Iran-Iraq war, and the Gulf War. The fund cut its 2026 global growth forecast to 3%, down from 3.1% in April, and warned of further downgrades if the conflict continues.

Brent crude rose 13.5% last week — its biggest weekly jump since April — and opened Monday above $90. US benchmark WTI traded near $84. The average price of a gallon of gasoline in the US has crossed $4. AMP Head of Investment Strategy Shane Oliver said a prolonged closure of the strait could push oil toward $150 a barrel, forcing demand destruction to rebalance supply, though his firm does not consider this the base case.

Friday’s sell-off, Monday’s rebound

Wall Street closed the week with broad losses. The S&P 500 fell 1.01% to 7,457.69 on Friday, the Nasdaq Composite dropped 1.4% to 25,520.24, and the Dow Jones Industrial Average shed 406.55 points, or 0.77%, to close at 52,146.42. Weekly losses were steeper: the S&P off 1.6%, the Nasdaq down 2.9%, and the Dow off 0.9%. The VanEck Semiconductor ETF (SMH) posted its third weekly decline in four weeks, falling roughly 9% over the period and sitting 20% below its June record. The semiconductor rout was driven partly by Chinese AI startup Moonshot unveiling its Kimi K3 model, which the company said approaches the performance of frontier US models — intensifying questions about whether the massive AI infrastructure spending cycle can justify its costs.

Yet Monday’s session told a different story. As of mid-afternoon, the SPY was up 0.41% and the QQQ up 1.10%, suggesting investors were looking past the geopolitical headline. Energy stocks advanced modestly: ExxonMobil (XOM) gained 0.90% to $148.69, Chevron (CVX) rose 1.25% to $189.72, and ConocoPhillips (COP) climbed 1.40% to $116.32. The United States Oil Fund (USO) was roughly flat. Gold, the traditional safe haven, slipped 0.08% to $4,013 per ounce — a sign that rising bond yields, not risk aversion, were setting the tone for the metal.

The more telling market signal was in rates. Thirty-year US Treasury yields pushed above 5%, and futures markets are now pricing 29 basis points of Federal Reserve rate increases by the end of the year, with a 60% probability of a hike as early as September. JPMorgan’s chief economist Bruce Kasman said the bank still expects the Fed to begin raising rates gradually in 2027, but acknowledged that recent policy signals have increased the risk of an earlier move. The European Central Bank, which meets Thursday, is expected to hold rates at 2.25%, but markets have nearly fully priced in another ECB increase by September, with rates expected to reach 2.75% early next year. The concern binding these together: higher oil prices risk reigniting inflation just as central banks thought they had it contained.

The global picture was darker. South Korea’s chip-heavy Kospi fell 4.1% as oil-driven inflation concerns lifted bond yields. Japan’s Nikkei was closed for a holiday after declining 6.4% the prior week. MSCI’s Asia-Pacific index outside Japan dropped 0.3%. Chinese blue chips bucked the trend with a 1.4% gain.

What to watch next

The critical variable is whether the Hormuz shutdown persists or a new ceasefire materializes. The first disruption lasted roughly four months before the June truce briefly reopened the strait. Each day of closure draws down the remaining inventories that the IMF flagged as already depleted. Several indicators deserve close watching:

• Shipping traffic data. The number of vessels transiting Hormuz daily is the most real-time gauge of whether the chokepoint is hard-closed or merely degraded. Sunday’s four transits, against a normal daily flow of 30-plus, suggest a near-total stoppage.
• Central bank reactions. The ECB meeting Thursday and any signals from Fed speakers this week will reveal whether policymakers are prepared to tighten into an oil-driven inflation shock — a fundamentally different challenge from the demand-led inflation of 2021-2023.
• Strategic reserve levels. The US Strategic Petroleum Reserve and international reserves were drawn down heavily during the first shock. If the current disruption persists, governments have less ammunition to release.
• Earnings season as inflation stress test. Alphabet, Intel, and Tesla report this week, and Bank of America expects S&P 500 earnings to beat consensus by 5%. But higher input costs from oil could compress margins, and the semiconductor rout raises the question of whether the AI capex cycle can survive both competitive pressure from Chinese models and rising energy-driven financing costs.
• Diplomatic backchannels. The Independent reported that Brent pared gains after fresh reports of diplomatic activity on Monday. Any signal of resumed talks — even informal — would likely trigger a sharp oil pullback, given how much of the current price reflects shutdown risk rather than physical shortage.

The market’s Monday rebound suggests investors are pricing in the possibility of another ceasefire. The IMF’s warning that the cushion is gone suggests that if they are wrong, the second shock will bite harder than the first.

Not investment advice. This article is research commentary for educational purposes only.