U.S. Investment Bank Says Strait of Hormuz Could Stay Closed for Months, Leaving Room for Oil Prices to Hit Record Highs

[Financial News] U.S. investment bank Piper Sandler has expressed skepticism about market talk that a deal with Iran is imminent. It warned that a prolonged blockade of the Strait of Hormuz could push international oil prices to record highs this summer.
According to CNBC on the 26th local time, Piper Sandler's energy and macroeconomic analysis team said in a recent note to clients, "The Strait of Hormuz is likely to remain effectively closed for the next several months." It added, "That will deepen the global crude supply shortage and act as a catalyst for oil prices to reach new highs this summer."
West Texas Intermediate crude oil (WTI) futures had been falling since the 22nd, but they rebounded on the 26th as conflicting messages emerged over Iran talks during the U.S. Memorial Day holiday period.
On the 23rd, U.S. President Donald Trump said he was optimistic that a deal with Iran had "essentially been reached and specific details would be announced soon."
However, the U.S. military said it had carried out "airstrikes in self-defense" targeting Iranian missile launch sites in southern Iran and vessels laying mines around the Strait of Hormuz, heightening tensions. Iran’s Foreign Ministry has also threatened that ships passing through this key route will "pay the price."
In this regard, Piper Sandler said commercial shipping volumes through the Strait of Hormuz would struggle to recover to even 50% of pre-crisis levels, even next week or next month.
The report said the United States is reluctant to launch an aggressive military offensive, while Iran believes it has gained leverage in negotiations and can keep the blockade in place for several more months.
CNBC said that if oil prices surge as Piper Sandler expects, it could shake the global economy, including stock markets.

jjyoon@fnnews.com Yoon Jae-jun Reporter