International oil prices have experienced a sharp reversal. The U.S.-Iran conflict has led to the closure of the Strait of Hormuz, causing the largest oil supply disruption in history and obstructing approximately 20% of global oil shipments. On Monday, international oil prices fluctuated violently, with WTI crude oil experiencing an intraday swing of $38, briefly surging to around $120 per barrel.

Subsequently, as major economies discussed releasing strategic petroleum reserves and former President Trump signaled a potential ceasefire, prices quickly retreated to around $90 per barrel.

According to a Monday report, Neil Atkinson, former head of the oil industry and markets division at the International Energy Agency, stated that an actual blockade of the Strait of Hormuz is an unprecedented situation for energy markets. He warned:

"Unless the situation is reversed quickly, we are facing a landscape-altering, unprecedented energy crisis."

Regarding oil prices, he was even more direct:

"There are no precedents to follow now; the trajectory can only be based on reasonable speculation, and the sky is the limit."

Currently, oil prices remain uncertain, with the U.S.-Iran situation being the key variable hanging over the oil market.

**Largest Supply Shock in History: Scale Exceeds All Previous Precedents** Analysis from energy consulting firm Rapidan Energy indicates that the scale of this supply disruption surpasses that of any previous oil crisis in history, more than double the previous highest record.

Rapidan analysts pointed out that the largest previous supply shock occurred during the 1956 Suez Crisis when the UK, France, and Israel invaded Egypt's Sinai Peninsula, affecting about 10% of global oil supply. The impact of the current Strait of Hormuz blockade is nearly three times the scale of the 1973 Arab oil embargo, which affected approximately 7% of global supply.

The Strait of Hormuz typically handles about 20% of global oil and natural gas shipments. However, since the conflict began, transit shipping has almost completely stalled, a situation that has persisted for nine days.

**No Spare Capacity Available: Market Lacks Effective Cushion** Rapidan analysts emphasized that the fundamental difference between this supply shock and historical crises is that the world currently has almost no spare production capacity available for deployment. Saudi Arabia and the UAE hold the vast majority of flexible production capacity, but due to the Strait of Hormuz blockade, these two countries have been cut off from the global oil market. They stated:

"This conflict has not only taken the highest percentage of global supply in history offline but has also disrupted the primary holders of flexible capacity. The result is a market with no substantive cushion; there are no swing producers able to step in and fill the gap."

Analysts noted that in this context, the global oil market will have to rely on a significant rise in oil prices to suppress demand to achieve a supply-demand rebalance. The U.S. Strategic Petroleum Reserve currently holds approximately 415 million barrels, about 58% of its 714 million barrel statutory maximum capacity. Rapidan considers these reserves "limited and insufficient to fully offset" the supply gap trapped in the Persian Gulf due to the Hormuz blockade.

**Production Shutdowns Spread: Multiple Countries Begin Cutting Output** As the situation persists, Middle Eastern oil producers have begun to cut production. According to reports, Iraq, Kuwait, and other countries have started shutting down some production capacity. A Societe Generale analyst warned in a Monday research note that prolonged production shutdowns by Middle Eastern countries would "significantly increase" the risk of difficulties in restarting. The analyst said:

"The UAE could be the next producer at risk of shutdown, potentially within the next five to seven days. Qatar also faces risks, although its oil production is relatively limited, it has significant liquefied natural gas exposure."

Janiv Shah, Vice President of Oil Markets at Rystad Energy, predicted that if the current situation persists for four months, Brent crude futures prices could climb to $135 per barrel. In a Monday research note, he stated:

"Based on current conditions, our forward-looking analysis for the next two months indicates oil prices will remain above $110 per barrel."