Oil Surges to $88 as Strait of Hormuz Shipping Collapses
Brent crude settled 4.6 per cent higher at $88.10 a barrel on Friday, capping a weekly gain of about 16 per cent — its strongest in months — as the US–Iran strikes choked the Strait of Hormuz. Confirmed crude transit through the waterway has fallen by around 62 per cent to some four million barrels a day. Tehran has pressed Yemen’s Houthis to be ready to close the Red Sea, raising the prospect of a second severed chokepoint.
Around a fifth of the world’s seaborne oil normally passes through Hormuz, so even partial disruption keeps a durable war-risk premium in the price. War-risk insurance on tankers has ballooned and traffic has thinned to a handful of vessels a day. A parallel campaign around the Bab el-Mandeb Strait, at the mouth of the Red Sea, would open a second crisis for crude and refined-product flows and force yet more shipping on the long haul around Africa. For Britain the transmission is quick, through petrol, diesel and the wholesale gas price that sets energy bills. Watch for any confirmed Houthi move, which could drive Brent decisively through $90.