Oil Prices Could Spike to $90 as Hormuz Crisis Leaves World Dangerously Undersupplied

A Fragile Peace With a Ticking Clock

On February 28, 2026, the United States and Israel initiated coordinated airstrikes on Iran under Operation Epic Fury, targeting military facilities, nuclear sites, and leadership. The conflict triggered one of the most severe energy disruptions in modern history. The Strait of Hormuz — which hosts 20 percent of the world's energy flows — has largely been shut since early March. A mid-June Memorandum of Understanding brought a partial reprieve, but it was short-lived. Now, with Trump declaring the interim peace deal "over" amid fresh drone and rocket exchanges, the window to stabilize global oil markets is closing fast.

The reality is there's no clear, long-term peace deal in sight, even if a full resumption of conflict is avoided. That means the Strait of Hormuz is unlikely to return to its normal volumes for many months, and certainly not in time for the anticipated spike in demand when China and refiners start buying more oil again. Energy analysts warn the consequences will be felt at every gas pump on the planet.

Markets Are Optimistic — Experts Say They Shouldn't Be

As oil prices fell after the interim peace deal was announced in mid-June, traffic through the Strait of Hormuz never rebounded to even one-third of its typical volumes. At the same time, shipping and insurance costs for oil tankers at least doubled. Yet financial markets have largely shrugged it off. The U.S. benchmark for oil hovered near $71 per barrel on July 10 as energy markets remained optimistic, with a quick pivot in early July to fears of a potential global oil glut — with production volumes rising in the Americas and now rebounding in the Middle East.

Veteran energy analysts say that optimism is dangerously misplaced. "There's a bill that's coming due," said Marshall Adkins, head of energy for Raymond James. "The market thinks, 'Oh yeah, things are going back to normal.' But, watching Iran for as long as I have, I don't think that's really going to happen." "The Iranians so far have been pretty successful at slow playing everything and wearing people out," said oil forecaster Dan Pickering, founder of Pickering Energy Partners. "It doesn't look like the regime is very weakened."

Depleted Stockpiles and a Looming Demand Surge

The world lost 1.4 billion barrels of oil supply during the war, according to JPMorgan, which left emergency and commercial crude stockpiles at their lowest levels in several decades. Low supply drove gas prices to four-year highs and consumer confidence to record lows. The damage to reserves is stark. The U.S. Strategic Petroleum Reserve sits below 326 million barrels of emergency oil, down 22% from the 415 million barrels just before the war — the lowest level since the Reagan administration was filling the SPR in 1983.

Commercial stockpiles remain at critical levels. Inventories in Cushing, Oklahoma — the pipeline crossroads of America — remain below operational stress levels. Stockpiles in Cushing rebounded by around 700,000 barrels recently, but are still less than 20 million barrels, at which point the facility struggles to pipe out crude to refineries across the country. Meanwhile, Adkins believes Iran will accept nothing less than a for-profit tolling system through the strait — effectively a service fee — and that Iranian control would likely keep traffic flows closer to half of their normal volumes.

A Political and Economic Reckoning Ahead

Prices are going to surge again — likely close to $90 per barrel — despite the world learning to adapt and avoid doomsday scenarios of $200 oil. And this could represent a nightmare scenario for a Trump administration eager to move on from Iran and lower fuel prices in time for the November midterm elections. Even with more barrels redirected via pipelines, it will take at least a year for Saudi Arabia and the United Arab Emirates to build new pipes — keeping at least 5% of the world's oil offline for many more months.

"I think everybody was stunned at the world's dependence on oil," said one analyst, noting that the effective closure of Hormuz was the greatest energy supply shock in modern history. That ongoing reliance should equate to at least a $5 per barrel geopolitical risk premium being baked into oil prices for the foreseeable future — separate from any incoming demand surges. Even if global oil demand is plateauing, it's not going away for decades to come. The Strait of Hormuz has always been a pressure point. Right now, the pressure has never been higher.