Oil Breaks $95 as Iran War Chokes Gulf Supply, Goldman Warns $120 Next
Oil prices surged past $95 a barrel on Wednesday as fighting between the U.S. and Iran intensified, shutting the Strait of Hormuz and threatening global supply lines [202019]. Goldman Sachs has warned that crude could hit $120 a barrel if the waterway remains blocked [201541][201023].
The U.S. has launched airstrikes against Iran for ten consecutive nights, hitting targets including the southern port city of Bandar Abbas [201822][197141]. In response, Iran shut the Strait of Hormuz for the first time in decades, a narrow passage that carries about 20% of the world’s oil [197141]. The U.S. Navy also seized an oil tanker bound for Iran’s Kharg Island, escalating the blockade [197011].
Iran has retaliated by striking U.S. military bases in Bahrain and Kuwait [201822]. Tehran is now using the threat of a global energy crisis as a weapon, betting that economic pain will force Washington to change course without triggering all-out war [201820].
The disruption has already driven U.S. crude prices up 15% in a single week [199027]. Norway’s state oil company, Equinor, nearly doubled its profit to $11.5 billion as it ramped up production to fill the gap left by halted Gulf shipments [201915]. Meanwhile, U.S. Defense Secretary Pete Hegseth announced the war has cost $37.5 billion so far and is seeking more funding [201832].
Iran-backed Houthi militants in Yemen have also declared a maritime embargo against Saudi Arabia, threatening to disrupt oil shipments through the Red Sea [200871]. Gulf producers are scrambling to secure alternative pipeline routes, but Iran is now reportedly targeting that infrastructure as well [198673].
China, wary of the conflict, has tightened controls on fuel exports to protect its domestic stockpiles [201637].