The volatility follows a sharp spike in regional hostilities after the downing of a U.S. Apache helicopter near the Strait of Hormuz. In retaliation, U.S. strikes hit targets within Iran, and U.S. Central Command forces disabled a tanker attempting to bypass the blockade. Tehran responded by officially declaring the vital waterway closed, exacerbating fears of a prolonged supply bottleneck.

Jorge Leon, senior vice president at Rystad Energy, notes that while the current situation remains a dangerous escalation, it is not yet a permanent resumption of full-scale war. Nevertheless, physical supply chains are already failing. Traffic through the Strait has plummeted to roughly 2 million barrels per day, a mere fraction of pre-war levels, with many vessels now traveling in "dark-mode" to bypass monitoring.

Energy executives are increasingly pessimistic regarding the buffer capacity of existing stockpiles. Neil Chapman, senior vice president at Exxon, warned at the Bernstein 42nd Annual Strategic Decisions Conference that global inventories are reaching historic lows. According to Chapman, once these reserves are exhausted, market models suggest prices could easily climb toward $150 or $160 per barrel as the industry struggles to compensate for the massive loss in daily output.