Oil prices have defied predictions of bigger increases, but analysts warn the markets' shock absorbers could wear out later this summer unless the Strait of Hormuz opens soon. President Trump said Thursday that a deal with Iran is imminent, though the outlook shifted multiple times in a single day. The global benchmark Brent crude is trading around $87.94 this morning, near its lowest levels in three months.
At stake is more than just market volatility. If stockpiles run too low and prices surge, the cost at the pump — which has been falling lately — could spike again just as midterm elections approach. Economically devastating shortages in major importing countries are also at risk, according to the analysis.
The threat level is rising. A recent note from investment firm Macquarie estimates that if the strait remains closed on Labor Day, Brent crude prices could reach $130 to $150. At some point, stockpiles will fall too low to keep easing the market, and other measures won't offset the loss of barrels flowing through the waterway.
That tipping point could come soon. The coming weeks will test whether diplomatic efforts or market forces can avert a crisis before the fall. The next moves by the Trump administration and Iran will be critical in determining the trajectory of global energy prices.
Oil markets appear to believe a deal might happen, though confidence remains fragile. The rapidly changing political landscape suggests any resolution could be temporary, leaving traders and consumers in a state of uncertainty.