Morgan Stanley Analysts Cite Hormuz Closure Driving 60% Oil Surge
Brent crude surged as much as 3.8% to $116.89 and West Texas Intermediate topped $100, driving a 60% increase in March as Iran-backed militants and US troop deployments escalated Middle East tensions. Morgan Stanley analysts warned that the effective Strait of Hormuz closure is inflicting significant end-use market losses.
1. Regional Escalation Spurs Oil Rally
Iran-backed Houthi militants in Yemen fired missiles at Israel while the US dispatched additional troops to the region, triggering Brent crude to jump as much as 3.8% to $116.89 and WTI to surpass $100. These moves have driven a 60% gain in Brent prices during March.
2. Strait of Hormuz Closure Strains Supply
Iran has choked off most tanker traffic through the Strait of Hormuz, allowing only limited vessels from select countries, while Houthi threats to Red Sea routes force costly rerouting. This intensified shipping bottleneck is elevating end-user costs and market volatility.
3. MS Analysts Highlight Market Impact
Morgan Stanley strategists Martijn Rats and Charlotte Firkins cautioned that the effective closure of the Hormuz waterway has produced substantial cumulative losses for energy consumers, signaling potential trading volatility and margin pressures for financial institutions.