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Market observers are closely monitoring the Strait of Hormuz, the world's most crucial oil transit chokepoint, as tensions escalate in the region. The strait, facilitating the flow of about one-fifth of global oil production daily, plays a pivotal role in connecting Middle East crude producers with key global markets.

Despite concerns, industry experts express scepticism about a potential closure. "The probability of a supply disruption, especially the shutdown of the Strait of Hormuz, is of low probability,” an expert commented. He highlights the economic reliance of oil-producing nations like Saudi Arabia, Iran, Iraq, and Kuwait on the revenue generated through the strait.

The World Bank, however, issues a warning, projecting that oil prices could surge to $157 per barrel if the ongoing conflict escalates. The report draws parallels to the Arab oil embargo in 1973, suggesting a potential ‘large disruption’ scenario that could initially drive prices up by 56% to 75%, reaching between $140 and $157 a barrel.

As geopolitical tensions unfold, stakeholders remain vigilant for any developments that may impact the stability of the oil market.