Oil markets are underpricing what traders and analysts describe as the largest supply disruption on record following the Iran war, which has effectively shut the Strait of Hormuz, a key artery for global النفط flows. Speaking at the FT Commodities Global Summit in Lausanne on April 21, executives said the scale of the shock has yet to be fully reflected in prices, despite significant volatility in Brent crude.
Brent prices briefly approached $120 a barrel after the conflict escalated before retreating to around $95 on expectations of a diplomatic resolution. Industry estimates indicate that approximately 1 billion barrels of supply have already been lost, with the figure potentially rising to 1.5 billion if disruptions persist. Saad Rahim, chief economist at Trafigura, said markets are struggling to price risk accurately, citing a “disconnect between perception and reality.”
Russell Hardy, chief executive of Vitol, said the disruption—driven by roughly 12 million barrels per day of curtailed output—already exceeds the scale of the 1990 Gulf crisis. He noted that the loss, equivalent to about 10 days of global consumption, is effectively “baked in,” given the time required to restore damaged infrastructure and restart production.
Analysts warned that even a fragile ceasefire may not restore flows quickly. Shore Capital said continued disruption could keep spot Brent in a $90–$100 range, while any renewed escalation could trigger further price spikes. Amrita Sen, co-founder of Energy Aspects, said flows may never fully return to pre-war levels, adding that the market could lose up to 450 million barrels of refined products, including gasoline and diesel, in a partial reopening scenario.
The disruption is expected to have broader supply-chain implications, including potential shortages in fertilizers linked to reduced Middle East gas output and constraints in metals processing due to limited sulphuric acid supply. Traders warned that prolonged closure of the strait could deplete global inventories within weeks and increase the risk of a wider macroeconomic slowdown, particularly across Asia, Africa and Australasia.
