Oil prices climbed to $90 a barrel on Monday, driven by escalating tensions between the United States and Iran that risk disrupting shipments through the Strait of Hormuz, a critical chokepoint for global crude supplies.
The Strait of Hormuz factor
The price jump comes as traders weigh the possibility of supply disruptions in the region. The Strait of Hormuz, located between Iran and Oman, handles about a fifth of the world's oil consumption. Any conflict or blockade could cut off a significant portion of global supply. The latest tensions have raised concerns about the safety of tanker traffic through the narrow waterway, where previous confrontations have led to spikes in oil prices.
Betting on a record
A prediction market now gives a 14.5% chance that crude oil will reach a new all-time high by December 31. While $90 is still far from the record level, the market is pricing in a non-trivial risk of a major spike. The odds have risen sharply in recent days as the US-Iran standoff intensifies.
What comes next
Investors are watching for any diplomatic moves or military posturing that could ease or worsen the situation. The next scheduled OPEC+ meeting is in early June, but the group has not signaled any emergency session yet. For now, the Strait of Hormuz remains open, but the risk premium in oil prices is growing.
