Oil prices have surged above $126 per barrel, reaching their highest level since 2022, as markets finally price in the risk that the Strait of Hormuz may remain closed. The strait, a critical chokepoint for global oil shipments, normally handles about a seventh of the world's supply. Its closure has taken millions of barrels offline, and traders are now grappling with the question of how high prices must go to balance supply and demand.
For months, markets shrugged off geopolitical tensions in the region, but the sustained disruption has changed the calculus. The Economist's editor-in-chief, Zanny Minton Beddoes, deputy editor Edward Carr, and a panel of experts discussed the factors driving the rally and the potential for further price increases.
Key questions remain: Will producers ramp up output elsewhere? Can strategic reserves be tapped? And how high must prices climb before demand destruction kicks in? The situation remains fluid, but one thing is clear: the era of cheap oil may be over for now.