Hormuz Closure Creates Critical Timeline for Oil Markets

Key Details Oil futures have remained surprisingly resilient despite the Iran conflict and Strait of Hormuz closure, according to Morgan Stanley analysts. The market has absorbed nearly 1 billion barrels in lost supply without matching 2022 price peaks, thanks to strategic buffers and investor optimism about reopening. Why It Matters U.S. crude exports have surged 3.8 million barrels daily while Chinese imports dropped 5.5 million barrels daily, effectively shielding global markets from 9.3 million barrels of daily tightness. However, this cushion has limits and sustainability is uncertain. The Timeline Morgan Stanley's base case assumes Hormuz reopens before the U.S. must cut exports or China halts import reductions. A closure extending into late June or July could force crude prices to rise significantly. Current Dated Brent forecasts sit at $110 this quarter, $100 next quarter, and $90 by October. Risk Factors If the strait stays closed beyond June, tighter supplies could push prices to the $130-$150 range under a bull case scenario. The U.S. export capacity appears most vulnerable to pressure, while China currently maintains better positioned reserves. Bottom Line Drivers should watch Hormuz developments closely as June approaches, as extended closures could translate directly to fuel cost increases at the pump.