Oil markets opened the week in full crisis mode — and two developments over the weekend made clear that this conflict is far from finding a ceiling.
Brent crude traded near $108 per barrel Monday morning while WTI crossed $102, each up roughly 3% on the session and more than 70% above where they started the year. The war in Iran is now in its fifth week, and the supply picture just got significantly more complicated.
A Second Chokepoint Enters the Picture
The Strait of Hormuz has been effectively closed since early March, stripping roughly 20% of global oil and LNG supply from world markets in a single stroke. Saudi Arabia’s East-West Pipeline — the only meaningful rerouting option — is already running at its full capacity of 7 million barrels per day with zero room to expand.
Now a second chokepoint is under direct threat. Iran-backed Houthi militants in Yemen are positioning to disrupt the Bab el-Mandeb Strait — the narrow passage between Yemen and Djibouti that connects the Red Sea to the Gulf of Aden. Every westbound oil tanker that escapes Hormuz via Saudi Arabia’s pipeline must still transit this corridor to reach European and Atlantic markets. Insurance costs for Red Sea routes are climbing sharply and shipowners are already pulling back.
If the Bab el-Mandeb is closed, the market loses another estimated 7 million barrels per day — stacked on top of the 15 million already offline. That math would represent the most severe supply disruption in recorded energy history, eclipsing the 1973 oil shock in scale and speed.
Washington Raises the Stakes
The second driver of Monday’s move came from the White House. President Trump renewed explicit threats to destroy Iran’s oil infrastructure, power generation plants, and desalination facilities if a deal is not reached imminently. The U.S. now has approximately 50,000 troops deployed to the Gulf, including elite rapid-entry units. A Wall Street Journal report Sunday evening added that the administration is weighing a special operations mission to extract uranium from Iran’s underground nuclear compounds — a scenario that analysts broadly view as an immediate and severe escalation trigger.
Treasury Secretary Bessent offered a partial offset, hinting at potential U.S. or multinational naval escorts to restore navigation through the straits — which briefly pulled futures off their highs at Monday’s open. But the underlying tension held. Iran has continued to insist it is not in active negotiations, even as Trump has claimed “great progress” toward a deal.
JPMorgan’s commodities strategy team, led by Natasha Kaneva, wrote Sunday that markets are still underestimating the downside risks. The concern, they noted, is no longer whether this escalates further — it’s when.
The Broader Market Fallout
The energy crisis is metastasizing beyond the oil patch. European gas storage entered this conflict at historically low levels — roughly 30% capacity — after a harsh winter. Dutch TTF gas benchmarks have nearly doubled since hostilities began. Chemical and steel manufacturers across the UK and EU have imposed surcharges of up to 30% to offset surging input costs. The ECB has already postponed planned rate cuts and revised its inflation forecasts higher.
The International Energy Agency announced what would be the largest strategic petroleum reserve release in its history — 400 million barrels — as a near-term stabilizer. It addresses the pressure but not the cause. With two chokepoints now in play, no diplomatic resolution on the table, and 50,000 U.S. troops in the region, the structural bid under oil prices isn’t dissipating this week.
The energy industry’s own assessment is blunt: this may only be the beginning of the supply shock, not the peak of it.
