Oil prices are rising again. Traders around the world are getting nervous. The main worry is the Strait of Hormuz. This narrow waterway carries about 20% of the global oil supply. Any disruption there can shake the entire energy market.
Analysts now believe prices could climb above $90 per barrel. This may happen if the conflict in the Middle East continues and shipping routes remain under threat.
Brent crude has already moved higher. It recently rose about 4% to around $88.85 per barrel. U.S. West Texas Intermediate crude also jumped. It gained about 5.3% and reached about $85.31 per barrel. These gains reflect the fear building in the market.
Strait of Hormuz disruption pushes oil prices higher
The Strait of Hormuz is one of the most important oil routes in the world. Tankers carrying crude oil pass through this route every day. If the waterway becomes unsafe, shipments can slow or stop.
Right now traders fear exactly that. Fighting between Iran and joint U.S. and Israeli forces has raised the risk. Many believe the conflict could threaten shipping in the region.
Analysts from UBS say current oil prices are not stable. They think the market is reacting to the risk of supply problems. If ships cannot move safely through the strait, the supply of oil could tighten quickly.
According to them, prices could easily cross $90 per barrel if disruptions continue. The situation could get worse if energy infrastructure is damaged.
Oil prices and inflation fears grow in the United States
Higher oil prices often mean higher fuel costs. That can quickly affect everyday expenses. Gasoline prices in the United States could rise if crude keeps climbing.
This has started to worry investors. Some fear that rising energy costs may push inflation higher again. If inflation rises, the Federal Reserve may delay interest rate cuts.
Bond yields in the United States have already moved higher. Stock markets have also felt pressure because of these concerns.
Still, UBS analysts say the impact may take time. Oil prices would need to stay high for several months before they strongly affect economic growth or inflation.
Oil prices may fall if the Middle East conflict eases
There is still a chance prices could cool down. Analysts say oil may drop back if tensions calm in the Middle East.
If the fighting stops, Brent crude could return to the $60 to $70 range. That would bring relief to energy markets and consumers.
For now the conflict shows little sign of slowing. Israel has carried out strikes against Hezbollah targets in Lebanon and also targeted locations in Tehran. Iran’s Revolutionary Guards responded with drones and missiles aimed at Tel Aviv.
As long as the conflict continues, traders will keep watching the Strait of Hormuz very closely. The global oil market depends heavily on what happens there next.