Oil at $99: The Strait of Hormuz Tax on Every American
Crude oil hit $98.71 on Friday, completing a 47% rally from $67 just two weeks ago. The catalyst is straightforward: the Strait of Hormuz, through which 20% of the world's oil transits daily, has been effectively shut since U.S.-Israeli strikes on Iran began February 28. Tanker traffic through the strait dropped 95% in the first week of March. It hasn't meaningfully recovered. This isn't a speculative spike driven by futures traders. Gulf states have physically cut production by at least 10 million barrels per day — 8 million barrels of crude plus 2 million barrels of condensates and NGLs — because storage is filling up with nowhere to ship. Southern Iraqi fields alone have slashed output by 70%, from 4.3 million to roughly 1.3 million barrels per day. WTI crude surged from $66.96 on February 27 to $94.65 by March 9, recording the largest weekly percentage gain in the history of oil futures trading. Brent briefly touched $119.50 before settling back around $94-95. The question facing consumers, central bankers, and portfolio managers is identical: how long does this last, and what breaks first — the blockade or the economy?