Piper Sandler Warns Strait of Hormuz Closure Could Last Months, Oil to Hit New Highs
CNBC reported Tuesday that investment bank Piper Sandler expects the Strait of Hormuz closure to persist for months. The firm warned that worsening supply shortages could lift crude oil to fresh yearly highs before summer ends.
Piper Sandler Makes a Stark Strait of Hormuz Closure Call
Piper Sandler’s energy and macro teams told clients the waterway will remain largely shut for the foreseeable future. The bank expressed minimal confidence that commercial vessel traffic would recover to even half of pre-crisis levels in the near term.
The firm believes both sides of the conflict lack the incentive to resolve the standoff quickly. Washington has reportedly been cautious about escalating pressure, partly out of concern over broader regional fallout. Tehran’s leadership, meanwhile, appears to view the chokepoint as a source of leverage and shows little appetite for compromise.
WTI crude futures came close to $120 a barrel when the conflict first intensified but have since pulled back to around $94. Piper Sandler argues that level is unlikely to hold if traffic through the strait stays near zero.
Why the Strait Matters So Much to Global Markets
The Strait of Hormuz is one of the most consequential energy corridors on the planet. It historically handled roughly one-fifth of the world’s seaborne oil, connecting Middle Eastern producers to buyers across Asia and Europe.
Tracking data suggests vessel movements have collapsed since the current crisis escalated. LNG shipments are also affected, compounding energy-supply concerns for import-dependent economies in Asia.
A Confusing Weekend of Mixed Signals
The latest flare-up in tension followed U.S. military strikes described as acts of self-defense against Iranian missile sites and vessels laying mines near the strait. The strikes created an awkward backdrop after President Donald Trump stated Saturday that a deal with Iran had been largely worked out, with a formal announcement expected soon.
Iran’s foreign ministry subsequently signaled that transit through the channel would carry costs, effectively dismissing the idea that any agreement was imminent. WTI futures dipped after the long weekend but recovered some ground Tuesday as traders weighed the conflicting statements.
What New Oil Highs Would Mean for the Broader Economy
A move above the $120 wartime peak would carry significant consequences beyond the energy sector. Elevated crude prices typically feed through into transport, manufacturing, and consumer costs within weeks.
Equity markets have staged a partial recovery since oil retreated from its crisis highs. Piper Sandler’s scenario would likely reverse much of that progress and reignite inflation concerns at a time when central banks are still managing price expectations carefully.
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