WTI Crude Swings Between $94 and $115 in April as Hormuz Blockade and Iran Ceasefire Whipsaw Oil Markets

West Texas Intermediate crude has experienced its most volatile week in years, plunging 16 percent on April 7 before rebounding to a four-year high of $115.42 per barrel by April 10. The extreme price swings reflect a market caught between fragile ceasefire diplomacy and the physical reality of a Strait of Hormuz that remains effectively closed to commercial shipping.

The April 7 crash, the largest single-day percentage decline since April 2020, came after the United States and Iran announced a two-week ceasefire barely an hour before a U.S. presidential deadline for military action. Traders initially interpreted the agreement as a pathway to reopening the strait, sending WTI down to $94.41 per barrel and Brent crude tumbling in parallel.

Ceasefire Unravels Within Hours

The optimism proved short-lived. Within hours of the announcement, disagreements emerged over the terms governing safe passage through the strait. Iran declared that its military would regulate all vessel transits, asserting what it characterized as sovereign authority over the waterway. The agreement on reopening commercial shipping appeared to break down as Israel continued military operations in Lebanon, adding a layer of regional complexity that the bilateral U.S.-Iran framework could not contain.

By mid-March, daily vessel transits through the Strait of Hormuz had already plummeted from a normal rate of approximately 140 ships to fewer than five per day, leaving an estimated 3,000 vessels stranded within the Persian Gulf. Major insurers had withdrawn war risk coverage for Hormuz transits, effectively imposing a commercial blockade even where a military one was not formally declared.

Price Rebound and the $115 Spike

As the ceasefire's limitations became clear, crude prices reversed course sharply. WTI surged to $115.42 per barrel on April 10, marking a 67 percent increase from the start of the year and its highest level since 2022. Brent crude pushed above $120 in dated physical markets, reflecting acute tightness in waterborne crude supply.

The pricing dislocation has widened the spread between benchmarks. Western Canadian Select, which moves by pipeline and rail rather than through maritime chokepoints, is trading at roughly a $16 discount to WTI, or approximately $99 per barrel. That spread represents a significant premium compared to historical norms, reflecting the relative security of landlocked supply routes.

Global Supply Implications

The Strait of Hormuz normally handles roughly 20 percent of global oil supply, including exports from Saudi Aramco, Kuwait, Iraq, the United Arab Emirates, and Qatar. With the strait functionally closed, those barrels are either stranded or rerouted through more expensive and time-consuming alternatives.

Saudi Arabia has capacity to redirect some exports via the East-West Pipeline to the Red Sea port of Yanbu, but that system can handle only a fraction of normal Hormuz volumes. Other Gulf producers have no viable alternative export routes, meaning millions of barrels per day remain effectively offline for as long as the blockade persists.

Major integrated oil companies including ExxonMobil, Shell, BP, and TotalEnergies have all flagged the Hormuz situation as a material risk in recent investor communications. Refinery operators in Asia and Europe are scrambling to source alternative crudes, with West African, Brazilian, and U.S. Gulf Coast grades all commanding significant premiums.

What Traders Are Watching

The market is now pricing two competing scenarios. In the first, diplomatic efforts succeed in reopening the strait within weeks, which could send WTI back toward the low $90s. In the second, the blockade extends through the summer, in which case traders see WTI potentially testing $130 or higher as strategic petroleum reserve releases and demand destruction become the primary balancing mechanisms.

OPEC+ has thus far declined to release additional spare capacity, with the cartel arguing that the supply disruption is geopolitical rather than structural. That stance adds further upside risk to crude pricing if the crisis persists.

For producers in North America, the price environment is exceptionally favorable. Canadian Natural Resources, ConocoPhillips, and other major operators are generating record free cash flow at current WTI levels, even as the geopolitical uncertainty complicates longer-term capital planning across the sector.