Oil Breaks $110: The Anatomy of the Global Energy Artery Blocked in the Strait of Hormuz

On Tuesday, April 29, 2026, Brent crude oil surpassed $111 a barrel, reaching its highest level in three weeks; WTI crude oil also jumped 8.48% intraday, climbing above $110. This means that prices, which had fallen to $86 following the brief ceasefire announced on April 7, have recovered almost 30% in just three weeks. Behind this movement lies a series of geopolitical developments that have caused the global oil market to swing simultaneously to two opposing poles.

1. The Double-Sided Grip of the Strait of Hormuz

The primary catalyst for this sharp rise in oil prices is the deepening of the historic blockage in the Strait of Hormuz. US President Trump's instruction to his aides to "extend" the naval blockade of Iranian ports signaled to markets that the supply disruption will not end in the short term. Tanker traffic through this critical waterway, through which approximately one-fifth of the world's oil trade passes, has almost completely stopped. According to KPL data, Iran's oil exports fell from 1.85 million barrels per day in March to 567,000 barrels per day in April.

The blockade in the strait is disrupting not only Iranian oil but also exports from other producers in the region. Although 52 Iranian ships have reportedly crossed the US blockade line in the last 72 hours, this activity does not mean that commercial tanker traffic has normalized. As the head of the International Energy Agency, Fatih Birol, stated, global markets are facing "the biggest energy supply shock ever encountered."

2. The Collapse of the Iranian Rial and Diplomatic Stalemate

This pressure on the supply side is compounded by the rapid unraveling of the Iranian economy. As of today, the Iranian rial has fallen to a historic low of 1.81 million against the dollar. The collapse in oil exports has triggered a spiral that could bring Iran's oil revenues close to zero within two months.

Although Tehran's new Hormuz proposal, mediated by Pakistan, was described by Foreign Minister Marco Rubio as "better than we thought," Washington has made it clear that it will not accept any framework that grants Iran control over the strait. Iran's refusal to open the strait before returning to the nuclear negotiating table is the main factor deepening the diplomatic impasse.

3. UAE's Historic OPEC Exit: Suppressing Bear Market Expectations

The second major development simultaneously impacting the oil market in the opposite direction was the UAE's decision to formally withdraw from OPEC and OPEC+ as of May 1, 2026. The UAE, which will be freed from its current production quota of 3.4 million barrels, aims to reach a capacity of 5 million barrels per day by 2027. Under normal circumstances, this would be expected to push oil prices down.

However, the market is pricing in the Iranian oil that was removed from the market today, not the additional oil that the UAE will produce tomorrow. Moreover, the UAE itself has been forced to significantly reduce its production due to the congestion in the Strait of Hormuz. This paradox shows how the expectation of increased supply on paper is ineffective against the physical market reality.

4. Signal of Historic Contraction on the Demand Side

The International Energy Agency's (IEA) April report is the clearest document revealing the contradictory picture in the oil market. The IEA revised its 2026 global oil demand forecast from an expected increase of 730,000 barrels per day the previous month to a contraction of 80,000 barrels per day now. Demand is expected to fall by 1.5 million barrels per day in the second quarter of 2026, which will be the sharpest quarterly contraction since the COVID-19 pandemic.

In contrast, OPEC maintains its forecast of a 1.4 million barrel per day increase in demand for 2026; The EIA has lowered its growth forecast to 600,000 barrels. This sharp divergence among the three major institutions reveals the extent of uncertainty regarding the direction the market will take, caught between a supply shock and a demand collapse.

5. Is Brent Targeting $150?

Goldman Sachs raised its fourth-quarter Brent forecast to $90, citing supply disruptions in the Middle East, while S&P Global revised its average Brent forecast for 2026 to $100 and its WTI forecast to $95. The most extreme scenario in the market is that Brent oil could reach $150 if the Strait of Hormuz blockage is not resolved by the end of April.

All these developments confirm that the oil market is currently not just a supply-demand equation, but also a geopolitical chessboard. Every move made in the Strait of Hormuz will determine not only the price per barrel, but also the global inflation trajectory, the interest rate policies of central banks, and ultimately the growth trajectory of the world economy.
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