Oil prices could hit $150 or even $200 a barrel as war in the Middle East disrupts supply, with analysts warning of severe economic shocks.
LONDON: Oil prices could surge to new record highs beyond $150 per barrel as conflict in the Middle East severely disrupts global supply. Analysts warn the economic fallout from the war will persist for months, with consumers already facing heavy financial pain.
Benchmark prices have soared more than 50% since the US-Israeli conflict with Iran began. The closure of the Strait of Hormuz, a vital chokepoint for one-fifth of the world’s crude, is a primary driver.
French bank Societe Generale said $150 is a “credible” outcome from a prolonged war. Most analysts estimate crude hitting between $130 and $140 per barrel.
Australian bank Macquarie forecast a staggering $200 per barrel should the conflict continue into June. This outlook could worsen if Iran’s key Kharg Island export terminal is attacked or another major route like the Strait of Bab al-Mandeb is disrupted.
International benchmark Brent crude and US West Texas Intermediate each hit record highs above $147 during the 2008 financial crisis. Prices are currently around $110 per barrel.
The International Energy Agency’s 32 member nations have pledged an unprecedented release of 426 million barrels from strategic reserves. The United States will provide 172 million barrels of this total.
These emergency releases “are not sufficient”, according to UBS commodities analyst Giovanni Staunovo. He noted the maximum release pace is about 3 million barrels per day, far below the 15 million barrels per day currently failing to reach the market.
IEA head Fatih Birol said the crisis is more severe than the oil shocks of the 1970s or the 2022 Ukraine war fallout. “April will be much worse than March,” Birol warned on a recent podcast.
The agency has identified about 40 key energy infrastructures damaged since the war began, each requiring significant repair time. For Asian and European nations dependent on Hormuz shipments, the situation appears bleak.
Governments now have less budgetary leeway to help households and businesses cope with soaring costs. Public debt is projected to reach 100% of global GDP by 2029, a post-World War II high.
Calls for energy-use moderation are multiplying in response. The European Commission has asked member states to reduce oil demand, while Bangladesh urged civil servants to cut electricity use.
Several countries, including Malaysia and Sri Lanka, are encouraging remote work where possible. “The reality is, the economic shocks caused by this war will be with us for months,” Australian Prime Minister Anthony Albanese warned.