Tankers are seen at the Khor Fakkan container terminal, the region’s only natural deepwater port and one of the main container ports in the Emirate of Sharjah, along the Strait of Hormuz, a waterway through which a fifth of the world’s oil production passes on June 23, 2025.
Giuseppe Cacace | AFP | fake images
Oil markets are bracing for a potential supply shock after US attacks on Iran over the weekend revived fears that flows through the Strait of Hormuz could be disrupted.
While analysts expect an immediate “knee-jerk” reaction to oil prices when trading resumes in New York on Sunday night, the bigger question is whether tensions could escalate into a sustained disruption to Gulf exports.
“At this point, it appears we are looking at a large-scale military conflict between the United States and Iran, which would be unprecedented and its trajectory impossible to assess,” said Vandana Hari, chief executive of energy research firm Vanda Insights.
“If this continues for days with Iran and its proxies retaliating, we are looking at worst-case scenarios for oil, including a major disruption to oil flows through the Middle East,” Hari told CNBC. This is unless the United States can preemptively disarm the Iranian navy and army, as well as ensure that oil tanker traffic through the Strait of Hormuz continues to flow normally.
With tensions escalating, attention has returned to the Strait of Hormuz, where any disruption would have immediate and enormous consequences for global oil and LNG flows.
Oil prices year after year
Located between Oman and Iran, the strait serves as a critical transit route – and potential choke point – for global crude, with around 13 million barrels per day passing through it in 2025, equivalent to about 31% of all seaborne oil flows, Kpler data showed.
It links major Gulf producers, including Saudi Arabia, Iran, Iraq and the United Arab Emirates, to the Gulf of Oman and the Arabian Sea.
Reuters reported on Saturday that an official at the European Union naval mission, Aspides, said commercial vessels had received VHF radio messages from Iran’s Revolutionary Guard warning that “no ship can pass the Strait of Hormuz.”
The official was quoted as saying that Tehran had not formally confirmed any directive to close the waterway.
The first signs are of a larger scale attack against Iran, with counterattacks that could escalate to attract several Gulf countries.
Reuters noted that Iran has repeatedly threatened over the years to block the narrow passage in response to attacks on the Islamic Republic.
In the past, Iran has repeatedly threatened to block the narrow passage in response to attacks on the Islamic Republic.
Bob McNally, president of Rapidan Energy Group, which had warned clients for weeks that conflict had a 75% probability, called it “a very serious development” for global oil and gas markets, given their dependence on Hormuz production and flows.
The most important issue is duration, industry veterans emphasized. The extent of any increase in oil and LNG prices will depend on the duration and extent of any disruption to Gulf production and flows, McNally said.
Worst case scenario?: Triple-digit oil
Analysts say potential scenarios range from limited disruptions to Iranian exports to a complete blockade of Hormuz.
The nightmare for global markets is not just the loss of Iranian barrels, but a broader disruption to shipping across the strait.
“Early indications are of a larger-scale attack on Iran, with counterattacks that could escalate to draw in multiple Gulf countries,” said Saul Kavonic, head of energy research at MST Marquee.
Kavonic said markets will initially price in a spectrum of risks, from the loss of up to 2 million barrels a day of Iranian exports to attacks on regional infrastructure or, in the extreme case, a disruption of passage through Hormuz.
“If the Iranian regime feels it faces an existential threat, attempts to blockade the Strait of Hormuz cannot be ruled out,” he said, although he added that the United States and its allies would likely deploy military escorts to protect sea lanes.
Infographic titled “Strait of Hormuz” created in Ankara, Turkiye, June 17, 2025.
Anadolu | Anadolu | fake images
If Iran succeeds in closing the Strait, the implications for global oil markets could be serious.
“This could present a scenario three times the severity of the Arab oil embargo and the Iranian revolution in the 1970s, and push oil prices into triple digits, while LNG prices hit all-time highs again in 2022,” Kavonic noted.
Brent Crude It settled at $72.48 on Friday, bringing its year-to-date gain to about 19%. US West Texas Intermediate (WTI) closed at $62.02, up approximately 16% year to date.
Andy Lipow, president of Lipow Oil Associates, said the attacks will significantly increase the risk of an oil supply disruption in the region, even though Iranian oil facilities have not been directly attacked so far.
Lipow described the worst outcome as “an attack on Saudi oil infrastructure followed by a complete closure of the Strait of Hormuz.” He estimates the probability of that scenario to be around 33%, given that Iran may feel cornered.
