International oil prices are on the rise, with Brent crude recently surpassing $90 a barrel, as geopolitical tensions between Iran and the United States escalate. The primary driver of this increase is the deepening standoff over the Strait of Hormuz, following the apparent breakdown of a 60-day diplomatic memorandum of understanding between the two nations.
The Strait of Hormuz is the world’s most critical oil transit chokepoint, a narrow waterway connecting the Persian Gulf with the Gulf of Oman. Roughly 20% to 25% of the world’s seaborne oil, equivalent to approximately 20-21 million barrels per day, transits through this passage. Any disruption here can lead to significant supply delays, higher shipping costs, and a substantial increase in global energy prices. Recent reports of a ship being attacked in the Gulf while transiting the Strait have further heightened security concerns for maritime transport.
Both the U.S. and Iran have hardened their positions. Iran has indicated its intention to maintain its blockade of the Strait, while U.S. President Donald Trump has affirmed there are no ongoing talks and that naval blockades against Iran will continue. This diplomatic impasse fuels market uncertainty, as the lack of progress toward a lasting agreement suggests that geopolitical risks will persist.
The sustained increase in oil prices poses a risk of reigniting global inflationary pressures and could constrain central banks’ ability to ease monetary policy. While some analysts suggest that these price gains could be short-lived should de-escalation occur or global demand wane, the immediate outlook points to continued supply chain strains and elevated energy costs. In response, countries like South Korea are already adjusting their import strategies, shifting away from Middle Eastern oil in favor of increased supplies from the U.S. to mitigate risks.
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