The global energy market’s safety cushion is rapidly shrinking. During Wednesday’s trading session, North Sea Brent crude surpassed $85 per barrel, while U.S. West Texas Intermediate (WTI) climbed above $80.
Both major oil benchmarks have gained for the third consecutive day, driven by escalating strikes between U.S. and Iranian forces near the Strait of Hormuz.
However, traders say the main concern is not short-term price movements but the limited spare production capacity available to replace potential supply losses if the conflict expands.
Global Oil Supply Buffer Nears Exhaustion
Jun Guo, a senior analyst at Sparta Commodities, said the reserve capacity that previously helped absorb supply disruptions for months is now close to being depleted.
The U.S. has been using its Strategic Petroleum Reserve (SPR) throughout the conflict, releasing additional supplies when tensions intensified to reduce pressure on prices.
If Washington and Tehran continue escalating rather than returning to negotiations, oil markets could face another sharp increase.
Concerns about limited reserves have been growing for months. During previous energy shocks, G7 officials discussed releasing up to 400 million barrels from strategic reserves, while ExxonMobil executives warned that global spare capacity is declining.
Trump Warns Iran Strikes Could Intensify
U.S. President Donald Trump has increased pressure on Tehran, warning that strikes against Iran could expand if negotiations do not resume.
Possible targets could include critical infrastructure such as power plants and bridges.
WTI prices have now returned to levels seen roughly one month ago as traders assess the risk of further supply disruptions.
Iran has also not ruled out restricting ship traffic through the Strait of Hormuz. Meanwhile, Trump abandoned a planned 20% tariff on cargo passing through the waterway, saying Gulf countries would instead pursue trade and investment agreements.
The U.S. also renewed its naval blockade of Iranian ports, continuing efforts to increase pressure on Tehran.
Strait of Hormuz Traffic Declines
Shipping companies have already reacted to the rising military risks. According to MarineTraffic data, only 57 vessels passed through the Strait of Hormuz over the previous weekend, about half the activity recorded a week earlier.
Before the escalation of hostilities in February, daily traffic through the strait averaged around 130 large-capacity vessels.
The decline highlights growing concerns that prolonged tensions could eventually affect one of the world’s most important oil supply routes.
Oil Market Watches $100 Target
Analysts believe oil prices could continue rising if supply risks become more severe.
A move toward $100 per barrel could become possible if markets begin pricing in a significant risk of shortages.
The U.S. Department of Energy has disputed claims of an immediate supply crisis, reporting that 8.5 million barrels of oil passed through the Strait of Hormuz in a single day with military support, keeping flows near normal levels.
Still, higher oil prices could complicate the inflation outlook. Analysts had expected June CPI data to show further cooling due to lower fuel costs, but future inflation trends may now depend on the next moves from Washington and Tehran.
