Oil Hit $100 Again. The Real Story Is the Strait of Hormuz

Every time Brent crude pushes back above $100 a barrel, it gets covered like breaking news — a sudden shock, a spike, a scramble. It happened again this month: Sensex and Nifty fell for three straight sessions, IT stocks led the losses, and financial television treated it as the story of the week. I think that framing is wrong, and it's been wrong for months now.

$100 oil isn't new. It's the latest data point in something that's been building since February 28, when the United States and Israel launched an air campaign against Iran. Oil hasn't suddenly gotten expensive. It's been expensive, on and off, for seven months. What actually deserves the "breaking news" treatment is a number almost nobody outside trading desks is talking about: how close the world's most important oil chokepoint has come to shutting down completely.

Forget the price. Watch the strait.

The Strait of Hormuz carries roughly a quarter of the world's seaborne crude and oil-product trade. Before the war, more than 100 vessels a day passed through it. By late August, that had fallen to around five a day — a roughly 95 percent collapse — as Iran's Revolutionary Guard boarded ships, laid mines, and warned tankers away from the strait outright. Gulf crude exports, which stood near 17 million barrels a day in 2025, had dropped to roughly 9 million barrels a day by August.

That's the mechanism I'd point to every time someone asks why oil keeps climbing. It isn't speculative fear driving traders. It's a real, sustained loss of supply from one of the few places on Earth that can move crude at scale, and it's been getting worse, not better. Houthi missile and drone strikes on Saudi Arabia's Jazan refinery in early September, which injured more than 70 people, opened a second front on the same story: this is no longer only a shipping-lane problem. It's now a problem for the facilities feeding those lanes too.

Two forecasts, and neither one is a guess

I don't think Wall Street's own numbers get enough attention here, because they say a lot about how unresolved this actually is. Goldman Sachs has told clients that if Hormuz disruptions persist into the fourth quarter, Brent could clear $120 a barrel and average around $100 through 2027. If Gulf exports normalize instead, the bank's base case settles closer to $85 — a number it already revised up once this year from an earlier $80 estimate, which tells you something on its own about how fast the ground has been shifting under these calls.

Both outcomes are still live. Nothing about the current standoff points cleanly toward either one, and that's exactly why oil is trading on a wide risk premium rather than a settled direction. Anyone telling you with confidence where Brent lands by December is guessing, Goldman included.

The promise that keeps missing its own target

President Trump has taken the opposite tone throughout, insisting oil and gasoline prices will fall sharply once the Iran war ends. He's put numbers on it more than once — below $2 a gallon at one point, revised down to $3 as, in his words, "a small price to pay" for a win. Neither number has held up against reality. US retail gasoline is running near $4.22 a gallon, about 32 percent higher than a year ago, and diesel is at a record high. At some point the gap between the promise and what people are actually paying at the pump stops being a footnote and becomes the story itself. I think we're past that point.

Where this actually lands, for us in India

India imports close to 88 percent of the crude oil it consumes, which is exactly why a Gulf shock like this one never stays a Gulf story for long. The rupee slipped past ₹95 to the dollar this month as the import bill widened. The RBI's own estimate is that a 10 percent rise in global crude prices adds roughly 20 basis points to inflation — a tidy textbook relationship that stops being tidy once oil has already climbed far more than 10 percent over seven straight months. I'd read the recent three-session slide in the Sensex and Nifty the same way: less a reaction to any single day's headline, more the market catching up to a conflict it can no longer treat as temporary.

What I'm actually watching next

Forget whether Brent touches $100 or $108 on a given day — it's already done both this year, and it'll probably do both again. The number that will tell you where this goes is Hormuz tanker traffic: whether it climbs back toward its pre-war norm, or stays pinned near the trickle it's been reduced to. A real recovery in Gulf shipping moves this toward Goldman's $85 case and takes some pressure off the rupee and Indian inflation. A standoff that drags on, especially if it spreads to more Saudi or Emirati infrastructure, points toward $120 and a longer stretch of expensive oil working its way through Indian households, importers, and the RBI's calculations.

Seven months in, that's the question I keep coming back to. Not whether oil is high — it obviously is — but how much longer the world's busiest oil chokepoint stays this empty.