Oil could soar to $200 a barrel if the Iran war drags on until June
Oil prices could reach an unprecedented $200 a barrel if the conflict in Iran continues until June, particularly if the Strait of Hormuz remains closed. According to analysts, a conflict extending into the second quarter could lead to historically elevated real prices, with a scenario probability of 40 percent outlined in a recent note. An alternative outlook, with a probability of 60 percent, indicated that the war may conclude by the end of this month, they stated.
Brent crude is poised to achieve a historic monthly increase in March, driven by the ongoing conflict involving the US, Israel, and Iran, which has significantly impacted the oil-rich region of West Asia. The ongoing conflict has resulted in Tehran managing a near-total blockade of the Strait of Hormuz, significantly limiting the flow of energy crucial to the global economy. “If the strait were to stay closed for an extended period, prices would need to move high enough to destroy a historically large amount of global oil demand,” the analysts stated in the March 27 report.
“The timing of the re-opening of the straits, along with the physical damage to energy infrastructure, serves as the primary factor influencing the longer-term effects on commodities.” Brent was last approximately $107 a barrel on Friday, following a peak of $119.50 earlier this month, which marked a crisis-high. The benchmark reached a nominal peak of $147.50 a barrel in 2008, as per data.
