JPMorgan Major Warning: If Hormuz Shipping Delayed Until July, Oil Prices Will Surge to $120 Peak

TradingKey - The shipping crisis in the Strait of Hormuz, triggered by the U.S.-Iran conflict, continues to escalate, becoming a focal point for global energy markets. This "energy choke point," which handles approximately 25% of global oil and 20% of liquefied natural gas shipments, directly impacts international oil prices.

JPMorgan ( JPM )'s latest assessment shows that if shipping through the Strait of Hormuz does not fully recover until July, international oil prices are expected to surge again, approaching the peak of nearly $120 per barrel reached during this round of the U.S.-Iran conflict.

Despite a two-week ceasefire agreement between the U.S. and Iran, shipping in the Strait of Hormuz has not returned to normal. Currently, vessel passage still requires approval from Iran's Islamic Revolutionary Guard Corps (IRGC), and enforcement remains selective, meaning commercial shipping is far from returning to a state of free navigation. According to ship-tracking data, only 15 vessels have entered or exited the strait since the ceasefire agreement took effect, compared to a pre-conflict average of 138 per day. As of April 9, 346 energy-related vessels remain trapped in the Persian Gulf.

Iran has also attempted to impose transit fees on passing vessels, a proposal that has met unanimous opposition from Western nations and United Nations shipping agencies. Maritime intelligence firm Windward noted that vessel passage through the Strait of Hormuz remains restricted and requires coordination, and commercial shipping has yet to return to free navigation.

On Friday, prices for both global benchmark Brent and West Texas Intermediate (WTI) crude were slightly below $100 per barrel. A further increase of $15 to $20 from current levels would push crude oil futures toward the peak of nearly $120 per barrel seen during the current conflict.

Furthermore, the disruption of shipping in the Strait of Hormuz has caused global shipping costs to soar and forced a restructuring of supply chains. Many shipping companies are opting to detour around Africa's Cape of Good Hope, significantly increasing voyage times and raising transport costs by approximately 25%. This has further inflated global trade costs, adversely affecting sectors such as manufacturing and transportation.

The impact of high oil prices has begun to spread to the broader economy. Brazilian pulp giant Suzano warned that if the Middle East crisis continues to drive up transportation and chemical costs, prices for daily necessities such as toilet paper, tissues, and diapers will rise across the board, potentially spreading inflationary pressure from the energy sector to a wider range of consumer goods.

Markets are pinning their hopes on upcoming U.S.-Iran negotiations to further ease tensions and expedite the reopening of the Strait of Hormuz to commercial shipping.

However, significant risks and uncertainties remain, including whether Iran is willing to relinquish its "strategic leverage"—control over the Strait of Hormuz—during the negotiations.

Regardless of the outcome of the negotiations, the optimism that briefly emerged in the market following the ceasefire may have already faded. Analysts have begun calculating timelines for the resumption of shipping and the potential for a new round of upward pressure on oil prices.

Against the backdrop of the current complex and volatile geopolitical landscape, navigation through the Strait of Hormuz will continue to be a key factor affecting global energy markets and economic stability. The international community urgently needs to promote regional de-escalation through dialogue and cooperation to safeguard the stability and security of global energy supplies.