18JUN

Brent at $112 as Houthis enter the war

2 min read

09:57UTC

Oil climbed 4.2% to $112.57 as the Houthi attacks added a second chokepoint threat to a market already pricing in near-total Hormuz closure.

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EconomicAssessed

Key takeaway

Brent's 51% monthly gain reflects dual-chokepoint risk not yet fully priced by markets.

Brent crude settled at $112.57 on 28 March, up $4.56 (4.22%), driven by Houthi entry into the conflict ¹. WTI crossed $100 for the first time since the Houthi escalation began. The monthly gain of approximately 51% is the largest single-month increase since the COVID recovery in mid-2021. Goldman Sachs estimates a $14 to $18 per barrel geopolitical risk premium is already baked into the price.

The Majlis Hormuz toll bill is expected to be finalised this week. Passage would embed Hormuz control in Iranian domestic law, making it constitutionally harder for any future negotiator to concede the point. The de facto $2 million per-voyage toll is already operational, denominated in Chinese yuan, with refusal to pay triggering boarding by IRGC naval forces. IEA demand destruction (growth revised down 210,000 barrels per day) suggests the price surge is partly offset by recession-driven demand collapse .

Deep Analysis

In plain English

Oil has risen 51% in 29 days, from about $67 per barrel before the war to $112.57. For comparison, petrol in the UK is now roughly £3.50 to £3.70 per litre where it was under £2.20 before the conflict. The immediate driver is the near-total closure of the Strait of Hormuz, through which 20% of the world's oil normally flows. The Houthi entry into the conflict on 28 March added another 4.22% to the price in a single day. The Iranian parliament is expected to pass a law this week making the Hormuz toll permanent under Iranian domestic legislation. If it does, markets will likely price in a longer-term disruption, pushing prices higher still.

Source Landscape

This story draws on mixed-leaning sources from United States

United States

Primary parallel: The 1973 Arab oil embargo produced a 300% price increase in five months. The current 51% increase in 29 days is faster in velocity but remains lower in absolute terms. Both events triggered recessions in oil-importing economies.

Counter-parallel: In 1973, the US had no domestic shale production; the energy transition had not begun; and there were no strategic petroleum reserves of comparable scale. The IEA's 400 million barrel release is a buffer the world did not have in 1973.

Brent's 51% monthly gain represents the largest single-month increase since mid-2021. The Majlis toll bill, expected to pass this week, would embed a $2 million per-vessel toll structure in Iranian domestic law. Passage would likely trigger a further market repricing as the duration premium on the disruption extends.

At $112.57 per barrel, UK retail petrol prices are approximately £3.40 to £3.70 per litre depending on refinery margin assumptions. Goldman Sachs's $14 to $18 geopolitical risk premium implies the underlying commodity cost would fall to $94 to $98 if the conflict ended tomorrow. The IEA's demand revision of -210,000 b/d signals early recession pressure that may widen if prices remain elevated through May.

Consensus view: Goldman Sachs commodity research and JP Morgan energy strategy desks both identify a $14 to $18 per barrel geopolitical risk premium in current Brent pricing above fundamentals, noting that markets are not yet pricing the full demand-destruction scenario because the war's duration remains uncertain.

Counter-view: Saudi Aramco's investment committee and OPEC Secretariat economists warn that the recession signal in IEA demand data (-210,000 b/d revision) may accelerate faster than the geopolitical premium sustains; a demand-driven price collapse could occur simultaneously with supply disruption.

Key tension: Whether the Majlis Hormuz toll bill passage this week, converting de facto IRGC control into domestic law, will force markets to price in a permanent rather than temporary Hormuz disruption, triggering the next price surge.

Sources:International Energy Agency·CNBC

Mentions:Strait of Hormuz →Iran →Islamic Revolutionary Guard Corps (IRGC) →International Energy Agency →Majlis →

First Reported In

Update #51 · Iran hits aluminium plants; Hormuz emptying

International Energy Agency· 29 Mar 2026

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Causes and effects

Caused by

Brent at $112 as Houthis join the war

Brent's 4.22% surge to $112.57 reflects the compounding economic impact of Houthi entry into the conflict adding demand-side uncertainty.

Occurred 28 Mar 2026

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This Event

Brent at $112 as Houthis enter the war

Brent's 51% monthly gain is the largest since the COVID recovery in mid-2021, and the Majlis Hormuz toll bill expected this week could convert the de facto closure into permanent law.

Led to

Brent above $116, set for record month

Brent at $112.57 on 28 March (ID:1695) advanced further to above $116 by 30 March, driven by Trump's oil seizure statement and the third consecutive Houthi attack on Israel.

Occurred 30 Mar 2026

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Different Perspectives

Cross-border power traders

The France-Germany day-ahead spread flipped from a EUR 17.20 German premium on 1 August to a EUR 4.15 French premium on 3 August, the same day French curtailment peaked. They cannot yet attribute the flip to curtailment alone, since a like-for-like overnight comparison shows French nuclear output rising while wind fell and demand returned on the weekday step.

EDF

River-cooling limits took 7.6 GW, 12 per cent of its fleet, offline on 3 August, the highest curtailment since the heatwave began, with an easing forecast to 4.3 GW on 4 August and 3 GW after. It manages the cut as a recurring seasonal constraint, expecting it to lift with river temperature, not repair.

Gasunie

TTF, the Dutch hub it operates, drifted to roughly EUR 55 to 58 per MWh across the window, staying inside its recent range through both the German spark reversal and the French curtailment. It reads a flat hub price as evidence that neither event this window carried enough weight to move the fuel leg on its own.

German gas-fired generators

Record German solar of 18,761 MW on 2 August pushed the clean spark spread to minus 18.48 EUR/MWh, a loss-making day, before it returned to plus 16.20 on 3 August. They now price dispatch against post-solar residual load rather than wind alone, since the sign flipped inside 48 hours on unchanged fuel and carbon costs.

European Commission (DG Energy)

Its implementing-measures register logged transposition notices from only Portugal and Slovakia against Wednesday's Article 94 deadline for Directive (EU) 2024/1788, with 25 states silent. It expects the register to fill only gradually, since filing routinely lags legislating and any infringement track against non-notifying states runs on a slower clock than the deadline itself.

Spain's LNG terminal operators

Spain's 9,145 GWh terminal inventory is the largest single stock in the EU LNG network, an option value that can reroute cargoes wherever the winter strip pays best rather than a cavern gas obligation tied to a fixed date. That flexibility matters more as Germany's cavern shortfall pushes more of the winter security question onto import infrastructure.