Oil could hit $200 if US-Iran war continues till June
What's the story
Macquarie Group has warned that if the ongoing conflict between the US-Israel and Iran continues until June, oil prices could hit a record high of $200 per barrel. The warning comes as the Strait of Hormuz remains nearly closed due to the war. Analysts at Macquarie Group, including Vikas Dwivedi, have outlined this scenario with a probability of 40%.
War resolution
Ending of war by end of March
The second scenario, which has a 60% probability, suggests that the war could end by the end of this month. Brent crude is already on track for a record monthly gain in March due to the US-Israel-Iran war's impact on the oil-rich Middle East. The conflict has resulted in Tehran overseeing near-total closure of the Strait of Hormuz, severely limiting energy flows crucial to global economy.
Price impact
Prices would need to rise significantly
The analysts at Macquarie Group have warned that if the Strait of Hormuz stays closed for a long time, prices would have to rise significantly to curb an unprecedented amount of global oil demand. They said in their March 27 report, "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."
Current rates
Brent crude prices near $108 per barrel
Brent crude prices were last seen near $108 per barrel on Friday, after hitting a crisis-high of $119.5 earlier this month. The benchmark had set a nominal peak of $147.50 per barrel in 2008, according to data compiled by Bloomberg. The analysts also noted that the closure of the strait has sent both crude and refined-product prices soaring due to its massive disruption effect.