JPMorgan: Hormuz Blockade Exceeding 6 Months Would Trigger Oil Price Shock
Taylor Wilson
JPMorgan warns that if the Strait of Hormuz remains closed past June, Brent crude could rise an extra $15/barrel per month in Q4 — a non-linear escalation that threatens to push global energy costs up in stair-step fashion.
How much does each extra month of blockade add to the price?
JPMorgan's head of commodities research, Natasha Kaneva, estimates that for every month the blockade extends past June, Q3 Brent averages rise by roughly $5/barrel and Q4 averages by roughly $15/barrel.
This means → the impact triples from Q3 to Q4. The price shock is not linear — it accelerates.
In plain terms = inventories work like a water tank. The first few months are manageable, but as the level drops, each extra month squeezes prices harder — like a spring compressed further and further.
JPMorgan's base case assumes the strait reopens in June. Under that scenario, Brent averages around $100/barrel for the rest of the year, dipping below triple digits only in December.
Oil is already at $100 — why is the market so calm?
Kaneva notes that despite an ongoing blockade and falling inventories, prices have been unusually stable. The reason: three buffers are operating at once.
Buffer 1: crude is still slipping through. Visible tanker traffic is only about 15% of pre-conflict levels, but some vessels are transiting with transponders — ship-positioning beacons — switched off or spoofed. JPMorgan estimates "covert flows" at roughly 2.1 million b/d in late May, with crossings nearly doubling over the prior two weeks.
Buffer 2: record output outside the Gulf. Brazil beat expectations by about 200,000 b/d year-on-year in the first four months; Venezuela exceeded forecasts by over 200,000 b/d. The U.S. has also ramped exports by drawing heavily on the Strategic Petroleum Reserve (SPR) — the national emergency crude stockpile.
Buffer 3: demand destruction, especially in China. Unexpected demand weakness is easing the supply gap — but that weakness is itself the economic cost of high oil prices.
Can these buffers hold?
All three buffers look effective on the surface, but each is extremely fragile.
Americas output is at a record, yet it is nowhere near enough to offset the roughly 16 million b/d of Middle Eastern supply at risk. Russia's refinery disruptions widened its own supply shortfall to 700,000 b/d in May, partly erasing the Americas' gains.
This means → the $100 price tag does not signal a small shock. It signals a market that has barely managed to absorb a massive shock — at considerable cost.
Where is the tipping point for market psychology?
Kaneva poses the central question: what would it take for the market to shift from a shrug of "is that all?" to the alarm of "what if this never ends?"
This reflects the true nature of the current calm — risk has not disappeared; it has been temporarily absorbed by three fragile buffers.
In plain terms = if any single buffer cracks — covert shipping is shut down, Americas output plateaus, or demand rebounds — repricing could be far faster than anyone expects.
The duration of the blockade remains the single most important unknown in the global oil market.
Content is for reference only, not financial advice.