Brent crude has surged into the $121 area after an eight-day rally, and traders are treating the move less like a temporary spike and more like a supply shock.
The Strait of Hormuz remains effectively closed to normal traffic, with only a handful of vessels crossing in recent days and commercial transit is still constrained by the US-Iran deadlock.
The International Energy Agency has already described the disruption as the largest oil supply shock in history, and that has shifted the market question from whether prices can stay elevated to how much higher they can go.
Wall Street is no longer treating $150 as a tail risk
The bullish case on crude has moved firmly into the mainstream.
J.P. Morgan warned in early April that oil could spike to $120-$130 in the near term, with a risk of surging above $150 if supply flows through Hormuz remain disrupted into mid-May.
The bank said the key issue is not just the initial price shock, but the length of the disruption and the drawdown in inventories that follows.
Goldman Sachs has also turned more constructive. Analysts led by Daan Struyven said:
The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, products shortages risks and the unprecedented scale of the shock
Goldman lifted its fourth-quarter Brent forecast to $90 a barrel, while also projecting that exports through Hormuz will normalize only by the end of June.
Citi sees Brent at $110 in the second quarter, with a bull-case $150 if disruption lasts through the end of June.
Why this shock feel different?
What makes this episode more dangerous is that the supply route itself remains impaired, rather than merely threatened.
As per local reports, just six ships crossed Hormuz in a 24-hour period on April 29, a fraction of the normal 125 to 140 daily passages before the war began.
The same report said traffic was largely moving through Iranian waters and that commercial routing remains uncertain even after the ceasefire announced on April 8.
In simple words, the market is not dealing with a clean reopening followed by normal flows; it is dealing with a supervised pause that keeps tankers, insurers and refiners guessing.
That distinction matters because energy markets do not price only the oil that is already missing; they also price the barrels that may still fail to move.
IEA sees supply falling by 1.5 million barrels per day this year because of the war, and that the agency still regards a resumption of flows through Hormuz as the single most important factor in easing pressure on prices.
What could bring prices back down
The clearest path to lower prices would be a credible reopening of the strait.
Goldman’s downside case assumes a normalization in Gulf exports by end-June, as the bank sees some recovery in Middle East output if the route stabilizes.
On the other side, J.P. Morgan’s warning shows how quickly the market can flip if disruption lingers into mid-May and inventories keep tightening.
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