WTI Crude Breaks $90 as Strait of Hormuz Shutdown Chokes Global Oil Supply

The Catalyst: Hormuz Goes Dark

Joint US-Israeli strikes on Iran beginning February 28 — dubbed "Operation Epic Fury" — killed Supreme Leader Ali Khamenei and triggered immediate Iranian retaliation with missile and drone attacks on Israeli territory and US bases in the Gulf. The IRGC issued warnings prohibiting vessel passage through the Strait of Hormuz, and within days tanker traffic dropped to effectively zero. Over 150 ships anchored outside the strait rather than risk passage.

The strait normally handles roughly 20% of global seaborne oil trade — about 20 million barrels per day — primarily from Saudi Arabia, the UAE, Iraq, and Qatar. Its closure is not a theoretical tail risk anymore. It is the trade.

Supply Destruction Is Already Real

This is no longer just a war premium. Physical supply is being destroyed.

Iraq has shut down 1.5 million barrels per day of production because without the ability to export through Hormuz, there is nowhere to put the oil. Kuwait followed with its own cuts after running out of storage. QatarEnergy halted operations at the world's largest LNG export facility after it was targeted by an Iranian drone attack.

JPMorgan's head of global commodities research warned that production cuts could approach 6 million barrels per day by the end of next week if the strait remains closed. That would be the largest supply disruption since the 1973 Arab oil embargo.

Historic Price Action

WTI crude posted a 35.63% weekly gain — the biggest in the history of the NYMEX crude futures contract dating back to 1983. A barrel closed Friday at $90.90. Brent briefly touched above $94, its highest since September 2023.

The move has been fast enough to catch much of the market offsides. Oil had been trading near $67 just two weeks ago. The speed of the repricing reflects the market shifting from what JPMorgan described as "pricing pure geopolitical risk to grappling with tangible operational disruption."

US gasoline prices jumped 27 cents per gallon in a single week to $3.25, and the political pressure on the Trump administration is building. A shipping insurance program announced Friday for vessels crossing Hormuz had zero market impact.

What Comes Next

The question is whether oil finds a ceiling here or whether $100 is in play. Analysts are increasingly pricing the latter.

The key variable is duration. Every day the Strait of Hormuz remains closed, Gulf producers lose more storage capacity and shut in more production. If this drags into a second week, the 6 million bpd disruption scenario JPMorgan flagged stops being a forecast and starts being a floor. The Strategic Petroleum Reserve can cushion short-term supply, but it cannot replace 20% of global seaborne oil for more than a few weeks.

On the Hyperliquid CL perp, the move tracked the underlying faithfully — up 9.3% over the last 23 hours to $91.67 on nearly $400 million in 24-hour volume. For traders who want exposure to the most consequential supply shock in decades without touching futures margin requirements, the perp is seeing real flow.

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