A significant supply shock has hit global oil markets following the US imposition of a blockade on the Strait of Hormuz, compounded by ongoing hostilities with Iran and threats to Gulf ports. Rabobank strategists note that Brent oil prices are currently down on screens, despite the US blockade and Iran's actions threatening prolonged disruption to oil flows. Two tankers have already turned away from the region, and refinery feedstock is running out, leading to looming shortages of key fuels in some areas. For instance, Qantas has begun cutting domestic flights in Australia due to these disruptions. Policymakers are responding by loosening energy taxes in an attempt to mitigate the supply shock, though Rabobank warns this could fuel inflation if the crisis persists [1].
BP has flagged an 'exceptional' oil trading performance in its updated first quarter guidance, attributing the windfall to the surge in oil prices since the start of the Iran war in late February. BP expects its net debt at the end of the first quarter to be in the range of $25-27 billion, up from $22.2 billion in the previous quarter, due to increased working capital needs amid heightened price volatility. BP's first-quarter results are scheduled for release on April 28. The company reported that Brent crude averaged $81.13 per barrel in Q1 2026, compared to $63.73 per barrel in Q4 2025. As of Tuesday, US crude oil futures for May delivery were trading around $97 a barrel, while Brent for June delivery was near $98.6 per barrel [2].
The US blockade of Hormuz, announced on Monday, aims to block all ships entering or exiting Iranian ports. President Donald Trump stated that the blockade's goals include both forcing Iran to reopen the Strait and bringing Iran to the negotiating table. The situation remains tense, with Russia withdrawing staff from Iran's Bushehr nuclear plant and US minesweepers possibly heading to the region, suggesting the Strait could remain closed for weeks. The US energy secretary has warned that oil prices are likely to rise until 'meaningful' traffic resumes through the Strait [1][2].
Market sentiment is highly volatile, with traders and analysts closely monitoring the impact of supply disruptions and geopolitical risks. Brent crude is finding support near $98 per barrel, with resistance at the $100 psychological level. Technical indicators point to strong momentum, but uncertainty around diplomatic developments could trigger sharp price swings. Hopes for peace talks persist, with potential negotiations in Islamabad as soon as this week, though recent talks have failed to yield a breakthrough. US Vice President JD Vance stated that further progress depends on Tehran [2].
CONCLUSION
The US blockade of the Strait of Hormuz and the ongoing Iran war have triggered a major supply shock in global oil markets, driving prices sharply higher and benefiting oil majors like BP. Market volatility remains elevated as geopolitical risks persist and diplomatic efforts continue. The situation is fluid, with further price swings likely depending on the outcome of ongoing negotiations.