‘Hormuz closure El Nino can increase food prices’:Oil prices can break the 2008 global financial crisis level rise to record highs, says report

The Strait of Hormuz closure and the El Nino effect can increase food prices worldwide, indicated a report by US-based multinational investment bank and financial services company, Citigroup Inc. According to the news agency, ANI, the Citigroup report states that agriculture price risks are heavily skewed to the upside over the next 6-12 months, as these face major supply risks resulting from a potential prolonged closure of the Strait of Hormuz, and from likely poor weather related to El Nino. What is El Nino? El Niño is a recurring climate pattern characterised by unusually warm sea surface temperatures in the tropical Pacific Ocean. While, in another report by a global research and consultancy group, Wood Mackenzie, global crude oil prices could rise to $200 per barrel in the worst-case scenario if the Strait of Hormuz remains closed. The report elaborated three possible scenarios with different timelines on opening the Strait of Hormuz and the subsequent impact on oil and gas supply, prices, energy demand and the broader global economy. The Strait of Hormuz is the most critical chokepoint in global energy markets, and a prolonged closure would become far more than an energy crisis. The longer disruption persists, the greater the impact on energy prices, industrial activity, trade flows and global economic growth. -Peter Martin, head of economics at Wood Mackenzie 1st scenario: Under the most optimistic ‘Quick Peace’ scenario, the warring parties reach a resolution by June, bringing immediate relief for the global economy. Brent crude eases to around $80 per barrel by the end of 2026 and falls further to $65 per barrel in 2027. ‘Summer Settlement’ scenario: ‘Summer Settlement’ scenario assumes the negotiations continuing until late summer, with the Strait largely closed. Oil and LNG shortages persist through Q3 of 2026, with risks of a shallow global recession by the second half of 2026. Worst-case scenario: The worst-case scenario imagines the Strait remaining largely closed through the end of 2026, with bouts of tensions spiralling between the two sides further constraining oil supply. Oil prices could reach $200 per barrel.