Oil Price to $130: Citi and Gunvor Warn Hormuz Chaos Could Last Months

Oil price is moving higher once again as supply concerns deepen around the Strait of Hormuz. While markets have reacted to headlines around ceasefire talks, the physical disruption to oil flows is still unfolding. Analysts at Citi say the situation could tighten further even if tensions ease soon. At the same time, trading firms like Gunvor are warning that volatility may not settle quickly. This points to a more prolonged adjustment in global oil markets.

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Citi Sees 1.7B Barrels Lost While Gunvor CEO Warns Volatility Extends Through Summer

Citi outlines three possible scenarios depending on how long the disruption in the Strait of Hormuz continues. In the most severe case, where flows remain constrained for eight to nine weeks from April 20, the oil price could reach $130 per barrel. This would come along with an estimated loss of 1.7 billion barrels of crude and refined products. It could further push global inventories to record lows.

In a more moderate scenario, where disruption lasts about a month, Citi expects oil to average around $110 in the second quarter. It should be noted that supply losses could reach 1.3 billion barrels. Even in a best-case outcome, where flows recover gradually, inventories could still decline by about 900 million barrels.

Russell Hardy, CEO of Vitol, said,

“In round numbers, the 1bn [barrels] is baked in now because we have probably lost 600mn to 700mn at this stage, but by the time things get moving again, if they get moving again, it takes time to bring all [the shut or damaged infrastructure] back.”

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Physical Supply Tightness Adds Pressure

Beyond forecasts, the current supply picture is already strained. Estimates suggest flows through the Strait of Hormuz are running at about 10% of normal levels. After accounting for rerouted supply and strategic reserve releases, global oil stocks are still falling by about 10.4 million barrels per day.

Gunvor CEO Gary Pedersen said the market could remain volatile for months. This is even as seasonal demand shifts. He noted that physical crude supply is “very tight.” Buyers are actively seeking alternatives to Middle Eastern oil. Shipping data shows this shift, with empty supertankers being redirected on longer routes to secure supply.

There is also a growing gap between futures pricing and physical market conditions. While futures have reacted to political developments, traders say they do not fully reflect the scale of supply disruption.

Some analysts warn that a prolonged closure of Hormuz could have broader economic consequences. A few others remain bullish on oil prices.

Currently, the key factor remains how quickly normal flows can resume. Until then, the oil price is likely to stay sensitive to both geopolitical developments and real-time supply data.

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