Following the recent US-Israeli strikes on Iran, shipping traffic in the critical Strait of Hormuz has seen a significant slowdown, with Iranian media reporting that this vital maritime artery, responsible for about a fifth of global oil supplies, is 'practically closed'. Market analyst Helima Croft from RBC Capital Markets warns that continued escalation could lead to oil prices exceeding $100 per barrel. The situation is precarious, hinging upon whether the Iranian Revolutionary Guard will capitulate under the pressure of aerial strikes or escalate the conflict further.

Croft notes that the ultimate effect of the military action on oil prices will significantly depend on the Iranian response; if the Revolutionary Guard decides to increase tensions rather than retreat in the face of US military actions aimed at regime change. Additionally, regional leaders have cautioned Washington about the risks associated with escalating tensions with Iran, indicating that oil prices surpassing $100 would pose a clear and immediate threat to the global economy.

The halt in tanker movements in the Strait, a crucial chokepoint for oil transit, raises alarms about potential supply shortages and the subsequent impact on global oil prices. As analysts assess the ramifications, attention is focused on diplomatic responses and the potential for further military conflict in the region, which could have lasting effects on international oil markets and geopolitical stability.