Rabobank’s Senior Macro Strategist Bas van Geffen reports that Brent crude futures are trading near $96 per barrel, having retreated from a recent peak of $108, as markets continue to price in a relatively optimistic scenario regarding the ongoing Iran conflict and its impact on oil supply routes [1]. Despite this, van Geffen cautions that the closure of the Strait of Hormuz, which has been effectively shut for several months, poses significant risks to global oil supply and inflation [1].
The report highlights that financial markets may not be fully accounting for the potential of physical oil shortages, especially if the Middle East conflict persists or escalates further [1]. The first signs of inflationary effects from the disruption have already begun to appear, and a more extended conflict could intensify these pressures, driving input costs higher and sustaining inflation [1].
Rabobank’s global strategist now assumes that the Strait of Hormuz will remain out of normal operation for up to three more months [1]. Even if the United States and Iran agree to extend the current ceasefire, this would not resolve the underlying conflict, and both sides have already violated the existing armistice [1]. An extended ceasefire may reduce near-term risks but could increase medium-term risks for the global economy, as prolonged closure of Hormuz would further strain supply chains and deplete fossil fuel inventories [1].
If negotiations between the parties fail and tensions re-escalate in the coming months, this would occur against a backdrop of already diminished oil supplies, potentially exacerbating market tightness and inflationary pressures [1].
CONCLUSION
Brent oil prices remain elevated due to the ongoing disruption in the Strait of Hormuz, with Rabobank warning of sustained inflationary pressures and supply chain risks if the situation persists. The market may be underestimating the potential for further shortages and price increases, especially if the conflict escalates or negotiations fail. Prolonged closure of this critical chokepoint could have significant medium-term consequences for the global economy.