US-Iran Tensions Escalate. Iran Announces Closure of Strait to All Vessels; Brent Crude Hits $95

TradingKey - The U.S.-Iran conflict continues to escalate, driving oil prices sharply higher. On Wednesday, Brent and WTI crude futures both closed higher, breaching $90 per barrel. During Thursday's session, oil prices rose further, with WTI futures climbing over 2% intraday to cross $92, while Brent crude rose 0.5% to exceed $95.

On the news front, in the early hours of the 11th local time, Iranian officials announced that the Strait of Hormuz is closed to all types of vessels effective immediately, and any ship attempting to pass through will be attacked. Previously, the U.S. military launched a "self-defense strike" in southern Iran on June 9, to which Iran promptly retaliated by targeting U.S. bases in the Middle East.

This wave of violence has further dampened prospects for a ceasefire agreement. Iranian Foreign Ministry spokesperson Baghaei stated that the U.S. continues to violate the ceasefire and has undermined the diplomatic process, necessitating a reassessment of the situation by Iran. According to Fox News, Trump stated: "If Iran doesn't sign the deal, we're going to blow them to smithereens tomorrow night (June 11 ET). This is the most violated ceasefire agreement in world history."

Meanwhile, crude oil inventories have continued to decline. On June 9, the U.S. Energy Information Administration (EIA) issued a forecast predicting that under the core assumption that maritime traffic through the Strait of Hormuz will not return to pre-conflict levels before early 2027, total oil inventories in OECD countries will fall below 2.3 billion barrels by December 2026, hitting the lowest level since records began in 2003. At that point, OECD oil inventories will cover only 50 days of future global demand, marking the most severe record since 2003.

Natasha Kaneva, Head of Global Commodities Strategy at JPMorgan, noted in the latest weekly report that global visible crude inventories will enter a "stress zone" in late June and approach operational floors by September. Once these floors are hit, the market will lose its buffer, and any new supply shocks could be transmitted directly to crude oil prices.

JPMorgan provided a forecast: under a base-case scenario where the Strait of Hormuz reopens in June, the full-year average price for Brent crude is expected to remain around $100 per barrel. However, for every additional month of blockade in the third quarter of this year, the average price would rise by approximately $5; for every additional month of blockade in the fourth quarter, the average price would rise by approximately $15.