Brent crude futures rose above the $110 per barrel mark on Monday as a prolonged Middle East crisis and the ongoing closure of the Strait of Hormuz continue to choke global supplies.
The Brent futures contract gained 1.4% to $110.74 per barrel. Murban futures closed at $108 on May 15 and were not trading by the time of publication of this oil price update.
"Brent trades back above [$]111, rising for a third consecutive day with no end in sight to the Middle East crisis," Saxo Bank analysts said.
HFI Research noted that the industry is on the verge of witnessing "record-breaking onshore crude inventory draws," predicting that the upcoming weekly data will showcase one of the largest total crude draws in history.
In response to these dynamics, HFI Research confirmed it has maxed out its long oil exposure as of Friday's close.
The prolonged shipping blockade is forcing both financial institutions and global governments to brace for a severe supply crunch.
JP Morgan analysts stated that a core assumption of their framework is that an accelerating depletion of oil inventories will ultimately force the reopening of the Strait of Hormuz.
However, the bank warned that even if shipping flows resume by early June, the market is expected to stay structurally tight well into the second half of the year.
Meanwhile, geopolitical tensions remain highly volatile.
Saxo Bank analysts highlighted recent comments from Donald Trump to Axios, where he stated, "We want to make a deal," but warned that Iran "will have to get there or they will be hit badly,".
As the blockade persists, the Financial Times reported that nearly 80 countries have introduced emergency economic shielding measures.
Saxo Bank analysts warned that the global market is entering a dangerous phase and approaching a potential tipping point, with traders anticipating another sharp rise for oil prices if the strait remains closed.