Oil prices climbed for a third consecutive session on Wednesday, as escalating geopolitical tensions in the Middle East intensified concerns over global energy supply.

WTI crude futures rose above $103 per barrel, supported by mounting uncertainty surrounding the US-Iran conflict and the effective shutdown of the Strait of Hormuz—a critical artery for global crude flows.

Strait of Hormuz Closure Triggers Historic Supply Shock

The disruption of the Strait of Hormuz has halted approximately 20% of global oil shipments, creating what the International Energy Agency described as the largest supply shock on record.

The closure comes amid stalled diplomatic efforts, with President Donald Trump stating that Iran has urged the United States to lift its naval blockade of the strait while negotiations to end the conflict remain ongoing.

With energy flows already constrained, markets are rapidly repricing supply risk, driving volatility across crude benchmarks.

US Escalates Pressure as Sanctions Expand

The United States has intensified pressure on Iran through additional measures, including potential sanctions targeting Chinese refiners linked to Tehran, as well as countries paying transit fees to secure passage through Hormuz.

These developments signal a broader escalation in economic and strategic leverage, further complicating an already fragile geopolitical landscape.

UAE Exit from OPEC Adds New Layer of Uncertainty

Separately, the United Arab Emirates announced plans to exit OPEC next month, seeking greater flexibility to adapt to rapidly shifting market conditions.

The move introduces additional uncertainty into global oil supply dynamics, as one of the group’s key producers repositions its strategy amid heightened volatility.

Outlook: Energy Markets Brace for Prolonged Volatility

The combination of disrupted supply routes, escalating geopolitical tensions, and shifting alliances within major oil-producing nations is reshaping the outlook for global energy markets.