Brent crude futures settled at $104.51 per barrel on Tuesday, up 0.3% on the session, as the Strait of Hormuz blockade entered its 11th week with no diplomatic resolution in sight. West Texas Intermediate traded at $98.38. President Trump's rejection of Iran's ceasefire counterproposal over the weekend dashed remaining hopes for a near-term resolution, locking in the highest sustained oil prices since 2022.
Supply Disruption Scale
Saudi Aramco CEO Amin Nasser warned that the market is losing roughly 100 million barrels of supply per week through the Hormuz chokepoint — approximately 20% of global seaborne oil trade. The International Energy Agency has called it the largest oil supply disruption in history, surpassing the 1990 Kuwait invasion and 2019 Abqaiq attack. While some tankers are rerouting around Africa's Cape of Good Hope, the added transit time and cost effectively reduces global supply capacity by 3-4 million barrels per day.
Consumer Impact
US gasoline averaged $4.18 per gallon nationally, up 31% year-over-year and the highest since October 2023. Some states, including California ($5.62) and Hawaii ($5.28), are seeing averages above $5.00. The gasoline surge was a major contributor to April's 3.7% CPI print. Airline fuel surcharges have risen 25-40% since February, pushing up air travel costs.
OPEC+ Response
OPEC+ has declined to release additional supply to compensate for the Hormuz disruption, arguing that the blockade is a force-majeure event outside their control. Saudi Arabia, which can export via the Red Sea and pipelines, has seen its market power increase significantly. The kingdom hiked June crude premiums to Asia by $1.40 per barrel last week, the biggest increase in 18 months.
Strategic Reserve Debate
The Biden-era Strategic Petroleum Reserve draw brought US stockpiles to 350 million barrels, down from 600 million in 2020. The Trump administration has been refilling at a slow pace and currently holds approximately 380 million barrels. Energy Secretary Chris Wright is facing Congressional pressure to authorize emergency releases if Brent stays above $100 through summer.