Why oil prices still high if ships are passing through Strait of Hormuz?

Global oil prices continue to increase despite a handful of vessels managing to transit the Strait of Hormuz.

This is because the blockage has triggered supply disruptions that can take months to recover.

The strait, which is responsible for controlling the traffic of 20% world’s crude oil and liquefied natural gas, has been effectively closed despite occasional ship crossings.

Even with the authorities enabling several vessels to pass through, the risks remain extreme. Missiles, drones, and naval mines have turned the trait into a war zone.

Insurance companies, unwilling to assume the liability, are refusing to underwrite voyages, creating what experts describe as “insurance-driven shutdown.”

Furthermore, attacks on oil installations throughout the region have disrupted oil output in several locations, thus restricting the amount of oil that can be moved.

The destruction of oil infrastructure, which was largely caused by retaliation by Iran and its Gulf neighbours, has resulted in supply shortages that cannot be swiftly addressed.

The consumers are already bearing the adverse consequences of it.

U.S. benchmark West Texas Intermediate crude hit $112 per barrel, its highest level since 2022.

As Trump has no clear exit plan, analysts warn that high prices may be the new normal for the foreseeable future.