Analyst warns oil may surge to $150 on Hormuz blockade

Brent crude (BZ=F) jumped above $103 a barrel on Monday after weekend negotiations between Washington and Tehran failed to produce a deal, further escalating a global energy crisis that has shaken financial markets, News.Az reports, citing Bloomberg.

US forces are expected to begin enforcing the blockade, which would apply to all vessels entering or leaving Iranian ports, starting at 10 a.m. New York time on Monday.

Speaking on Bloomberg Television, Onyx Capital Group Managing Director Jorge Montepeque said current prices do not reflect the potential impact of a full escalation. “The number we saw this morning — $103; 8% increase — is not reflective at all of what could happen if the US really decides to go with this interdiction,” he said. “It really makes no sense. It should be $140, $150.”

Montepeque warned that a US blockade could escalate a regional conflict into a global crisis, potentially removing up to 12 million barrels per day from global supply. He added that traders initially saw it as unlikely that both sides of the Strait would be fully blocked, which helped keep early price reactions relatively contained during Asian trading hours.

“This is, in one word: demented,” Montepeque said in an interview with Haslinda Amin. “It makes no sense what the US is doing because they are so focused on Iran that they are losing sight of what they are causing to the world. And the pain is in Asia, the pain is in the South Pacific, the pain is in anybody that depends on oil.”

He also suggested that if US President Donald Trump were to scale back some actions, oil prices could stabilize closer to around $100 per barrel for the rest of the year.