Oil is on track to notch its most violent session in four years.
West Texas Intermediate futures surged more than 8% to about $72 per barrel Monday morning as markets reacted to coordinated U.S. and Israeli strikes on Iran, including the confirmed killing of Supreme Leader Ayatollah Ali Khamenei, which has intensified fears of broader conflict and supply disruption.
This move could mark the largest one-day oil rally since March 2022, when Russia’s invasion of Ukraine triggered a global energy shock.
This time, the flashpoint is narrower — and potentially more dangerous.
Why The Strait Of Hormuz Matters
Roughly 20 million barrels per day transit the Strait of Hormuz, accounting for about 20% of global oil consumption and a similar share of liquefied natural gas trade.
More than 80% of that crude heads to Asia. Japan relies on Hormuz for roughly 72% of its crude imports, South Korea for 65%, while India and China each source about half of their supply through the strait.
Europe’s exposure averages near 18%.
The United States, by contrast, depends on the passage for only about 2% of its crude imports, leaving it relatively insulated compared to major Asian economies.
How Long Could The War In Iran Last?
Dan Alamariu, chief geopolitical strategist at Alpine Macro, indicated that the Iran conflict will likely be intense but contained.
In a Monday note, he projected a war lasting one to three weeks, potentially stretching to two months at most.
Iran, he said, cannot win militarily but can still “inflict material economic damage and market volatility” by interfering with Gulf oil flows.
He expects oil, gas, gold and aerospace and defense equities to spike in the near term, though he cautions that extreme moves could fade if the conflict resolves within weeks.
According to the expert, the key variable now is duration.
If disruption to Gulf exports lasts beyond one to two weeks, roughly 14 million barrels per day that lack sufficient bypass pipeline capacity could effectively be at risk.
That scenario would likely lift inflation expectations, pressure global equities and push crude decisively higher.
A move back into triple-digit territory would not be unthinkable under prolonged impairment.
7 US Energy Stocks Rallying
Energy equities tracked crude higher in premarket trade on Monday. The Energy Select Sector SPDR Fund (NYSE:XLE) was sharply higher by 4%, as investors rotated into oil producers.
Among the biggest movers:
- APA Corp. (NASDAQ:APA) gained 8.50%
- Occidental Petroleum Corp. (NYSE: OXY) climbed 7.20%
- Devon Energy Corp. (NYSE: DVN) advanced 6.18%
- Coterra Energy Inc. (NYSE: CTRA) rose 5.87%
- EOG Resources Inc. (NYSE: EOG) added 5.82%
- Diamondback Energy Inc. (NASDAQ:FANG) up 4.9%
- ConocoPhillips (NYSE:COP) up 4.6%
Investors are also closely monitoring Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) as integrated majors with global exposure and strong free cash flow leverage to higher crude prices.
Photo: Shutterstock
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