Morgan Stanley Warns of Oil Price Shock if Strait of Hormuz Stays Closed

Morgan Stanley warns the prolonged closure of the Strait of Hormuz could drive oil prices sharply higher. The disruption, which began in February 2026 after U.S. and Israeli strikes on Iran, has already halted approximately 20% of global oil flow-the largest supply crisis in history, according to the International Energy Agency.

While President Trump’s naval escort and insurance guarantee programs have offered some short-term stability, diplomatic efforts remain stalled. The bank’s analysis suggests that if the strait stays closed into June, WTI crude could surpass $150 per barrel, triggering demand destruction and severe price volatility.

Markets are now focused on U.S.-Iran negotiations, upcoming OPEC+ decisions, and weekly inventory data from the EIA and IEA. Any military escalation or breakthrough in diplomacy could be the next major price catalyst.