Eighty-dollar oil is back
WTI crude punched above $80 a barrel on Wednesday for the first time since October 2024, lifted by a shipping crisis in the Persian Gulf that shows no sign of easing. The US benchmark settled near $81, up more than 20% from where it traded before US and Israeli forces launched Operation Epic Fury against Iran on February 28.
Brent crude tracked higher at roughly $85.45, its strongest level in over a year.
Hormuz stays shut
The rally hinges on a single chokepoint. The Strait of Hormuz, a narrow channel between Iran and Oman, carried about 14 million barrels a day of crude and condensate in 2025, roughly a third of all seaborne oil exports worldwide.
Since Iranian officials confirmed the strait closed on March 2, tanker owners have pulled their ships from the area. Protection and indemnity insurers withdrew coverage for transits as of today, making passage an uninsurable risk.
Trump responded Tuesday by ordering Navy escorts and federal insurance backing for tankers willing to run the strait. The Navy, however, warned it lacks the vessels to guarantee safe passage for commercial traffic at scale.
Banks race to update forecasts
Goldman Sachs raised its second-quarter Brent forecast by $10, to $76 per barrel, and bumped WTI by $9, to $71. The bank warned that five weeks of sustained Hormuz disruption could send prices past $100.
Wood Mackenzie went further. The consultancy said $150 oil is within reach if the waterway stays blocked through April.
UBS analysts struck a more cautious note, saying Brent could spike above $120 briefly but will likely settle back into the $70-$80 range once shipping resumes.
Pain at the pump
US retail gasoline has already jumped 27 cents a gallon in the past week, hitting $3.25 on average nationwide. AAA data shows the sharpest weekly increase since Russia invaded Ukraine in 2022.
Drivers in California are paying north of $4.50 a gallon, and analysts at GasBuddy expect another 25 to 40 cents of increases before prices stabilize.
What traders are watching
Three factors will determine whether oil stays above $80 or retreats:
- Navy escorts: Can the US military reopen Hormuz to commercial traffic? Early signals suggest it will take weeks, not days.
- OPEC+ discipline: The group just approved a 206,000 barrel-per-day increase for April, but Saudi Arabia has spare capacity that could cool prices fast if Riyadh chooses to act.
- Ceasefire talks: Any diplomatic breakthrough between Washington and Tehran would likely trigger a sharp selloff.
For now, the market is pricing in disruption, not resolution. And at $81 a barrel, WTI is telling traders the worst may not be over.