Societe Generale analysts have highlighted that President Trump’s recent actions toward shutting the Strait of Hormuz, combined with ongoing Iranian threats, are likely to keep Brent crude oil prices supported in the near term [1]. The breakdown of Islamabad negotiations over the weekend has escalated tensions, with President Trump signaling a de facto move to close the strategic waterway. The analysts describe a scenario where the Strait could become a two-track system: one channel subject to Iranian transit or tolling measures, and another potentially blocked by sea mines, which would be difficult for US efforts to fully counter [1].
The potential halt of Iranian crude exports is estimated to remove between 1.5 and 2.0 million barrels per day (mb/d) from global supply, which would accelerate inventory draws and drive oil prices higher worldwide [1]. Societe Generale notes that, due to the blockade news, the probability of their base case scenario shifting to an alternative scenario has increased, with market normalization now expected to be delayed from late April into mid-May. The scenario analysis incorporates further potential losses of Iranian barrels, and, after accounting for rerouting, strategic petroleum reserve (SPR) releases, demand destruction, and other offsets, the implied supply deficit is projected to rise to 7.9 mb/d in April and 6.1 mb/d in May [1].
From a fundamental perspective, the analysts estimate that global oil inventories have already drawn down by more than 190 million barrels since the onset of the conflict. Current global inventories are approximately 7.9 billion barrels, with about 6.2 billion barrels held on land and 1.7 billion barrels afloat [1]. Societe Generale expects that a successful blockage would accelerate this drawdown further, reinforcing a tighter global oil balance and supporting higher Brent prices in the near term [1].
CONCLUSION
Societe Generale analysts anticipate that ongoing conflict and the potential closure of the Strait of Hormuz will keep Brent prices elevated due to significant Iranian export losses and accelerated inventory draws. The market is expected to remain tight, with normalization delayed and supply deficits widening, signaling sustained upward pressure on oil prices.