Oil prices climbed back toward $105 after the latest escalation around the Strait of Hormuz, but markets have stopped well short of panic pricing. Despite strong headlines around a US “total blockade” of the Strait of Hormuz following inconclusive US-Iran talks in Islamabad, the response has been controlled rather than explosive. The moves in Brent and WTI crude reflects a reversal of the earlier “peace premium”, with traders resetting to pre-ceasefire risk levels—unwinding expectations of a near-term diplomatic breakthrough without fully pricing a worst-case disruption scenario.
Targeted vs. Total Blockade
The muted reaction points to a critical nuance: the difference between a “targeted” and “total” blockade. US President Donald Trump’s rhetoric was sweeping, declaring that all ships entering or leaving the Strait would be blocked. However, the operational reality has been far more contained.
US Navy and CENTCOM clarifications indicate that enforcement is focused on vessels linked to Iranian ports. This effectively removes around 1.5–2 million barrels per day of Iranian exports, rather than shutting down the entire artery of global energy flows.
This distinction matters. While Iranian supply is significant, it is not system-critical in the same way as the full Strait of Hormuz, which carries roughly 15–18 million barrels per day. As long as flows from Saudi Arabia, Kuwait, and the UAE remain uninterrupted, the market avoids a full-scale supply shock.
Moreover, Iranian oil has long been constrained by sanctions and often routed through a “shadow fleet.” Its removal, while disruptive, is not an unknown risk. This helps explain why markets have adjusted rather than panicked.
Diplomatic “Door Ajar”
A second key factor is that the diplomatic door remains open. While the Islamabad talks failed to produce a framework, they did not collapse into confrontation. Both sides acknowledged the engagement, and the ceasefire technically remains in place until April 22. Markets are interpreting the blockade as a high-stakes negotiating tool rather than a definitive step toward war.
114.81 as key level for Brent
Technically, Brent’s rebound from 93.30 suggests near-term upside risk remains, but gains are likely capped by 114.81 resistance without clear escalation. On the downside, a break below 96.87 minor support would reopen bearish momentum toward 90.
However, a decisive break above 114.81 would signal that markets are shifting into full escalation pricing, opening the path for a rapid move through the 120 crisis threshold.
