The Three Major Drivers of Oil Prices—Strait of Hormuz, Ultimatum, and the Global Oil Rush

On April 7, 2026, the US-Iran conflict has entered its 40th day, and the oil market is in a historic moment of extreme tension. Current WTI crude is trading at 115.41 USD per barrel, while Brent crude is trading at 111.35 USD per barrel, nearly doubling compared with before the outbreak of the conflict.

Driver One: Strait of Hormuz blockade. Since the US and Israel launched military action against Iran on February 28, the Strait of Hormuz shipping has been essentially shut down. This waterway typically carries about 20% of the world’s oil flow, and the disruption directly leads to a supply shortage.

Driver Two: Trump’s “ultimatum.” Trump set 20:00 on April 7 Eastern Time as an “unchangeable” final deadline, threatening to destroy all of Iran’s bridges and power plants if Iran does not reopen the strait. Iran, in turn, rules out a temporary ceasefire and puts forward 10 demands, including the lifting of sanctions and post-war reconstruction, stressing that the war must be “permanently ended.” Israeli Prime Minister Benjamin Netanyahu even warned Trump not to reach a ceasefire with Iran at this stage. Divergent positions among multiple sides make the situation even more complex.

Driver Three: The global “oil rush.” Due to Middle East supply disruptions, refiners in Asia and Europe are scrambling to find alternative sources. The US WTI crude spot premium has surged to a record high. Canadian synthetic crude trades at a 19.90 USD premium versus WTI, whereas a month ago the premium was only about 1 USD. Saudi Aramco raised its May official selling price for Asia to a record premium of 19.50 USD per barrel. South Korea even dispatched 5 oil tankers to Yanbu port on Saudi Arabia’s Red Sea to ship oil and open alternative routes that bypass the Strait of Hormuz.

Market focus: The 8:00 PM deadline tonight is crucial. If negotiations break down, oil prices could instantly break through the 115 to 120 USD range; if there are signs of easing, oil prices could quickly drop. Investors need to closely watch this time point.

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