Oil Market Nears «Tipping Point» as Hormuz Blockade Threatens Critical Stock Levels

Oil traders warn the market is four weeks from a «tipping point» that will significantly raise prices, as the Strait of Hormuz blockade reduces global stockpiles below critical levels. US President Donald Trump told oil executives Thursday the blockade could «continue for months,» leading markets to price in a longer conflict.

Traders and analysts, including Frederic Lasserre of Gunvor, predict global crude, gasoline, diesel, and jet fuel stocks will hit critically low levels by the end of May, causing rapid price escalation. Lasserre stated, «The tipping point is clearly June,» warning of «huge pain» as economies face fuel shortages, leading to industry shutdowns and recession. Amrita Sen of Energy Aspects added that if the war continues until the end of June, all stocks would be exhausted, potentially driving Brent futures to $150-$200 a barrel.

Brent reached a four-year high above $126 a barrel this week, though it fell below $110 on Friday for July futures. Many initially expected a short war, but expectations are shifting. Helima Croft of RBC Capital Markets noted that if the blockade persists through May, oil prices could exceed 2022’s high of just under $140 a barrel. She highlighted the White House’s initial messaging of a short war, which now appears unsustainable through summer.

Despite initial buffers and strategic petroleum releases, US gasoline stocks fell to 222 million barrels by April 24, their lowest in over a decade for this period, according to the US Energy Information Administration. This decline is particularly concerning as the US summer driving season approaches, moving the market into a «danger zone» for peak demand.