Forget Oil At $100, Experts Warn $140 Is Possible If Iran Tensions Escalate Amid Strait Of Hormuz Closure

Energy markets are bracing for potential upheaval as geopolitical tensions in the Middle East threaten to disrupt global oil supplies. The situation could lead to a significant spike in oil prices, leaving the possibility of $100 per barrel prices in the rearview mirror.

Strait Of Hormuz Key To Oil Price Direction

According to the analysts at ING, the closure of the Strait of Hormuz by Iran could significantly disrupt global oil supply, pushing prices to $140 per barrel.

The analysts highlighted the risk of prolonged military action and aggressive responses from Iran.

"ICE Brent could trade into the region of $80-90/bbl immediately, with risks for further strength towards $100/bbl and ultimately $140/bbl (worst-case scenario), if we are to see significant and extended oil supply disruptions," the firm stated in its report.

European gas and Asian LNG markets might experience even more dramatic price increases due to potential disruptions in Qatari LNG flows, the analysts stated. The report notes that if these markets anticipate extended losses, TTF gas prices could surge to EUR 80-100/MWh ($28-35/MMBtu).

Reported Strikes On Iran's Critical Oil Export Hub

Unconfirmed reports suggest strikes on Iran’s Kharg Island, a critical oil export hub, which could impact 1.5 million barrels per day, primarily destined for China. Additionally, Israel has pre-emptively shut its Leviathan and Karish gas fields, affecting 17 billion cubic meters of annual production.

The closure of the Strait of Hormuz, a vital passage for 20 million barrels of oil and over 100 billion cubic meters of LNG annually, poses a significant threat to global energy markets. The U.S. may respond strongly to any attempts to enforce such a blockade.

Boiling Tensions In Middle East

President Donald Trump on Sunday took to Truth Social to warn Iran against taking any action against the U.S., saying “they better not do that” and saying the U.S. will hit Iran with “a force that has never been seen before” if they do.

The resulting military actions have led to the shutdown of Middle Eastern air corridors, causing travel disruptions and heightening tensions further. The potential closure of the Strait of Hormuz could severely impact global energy supplies, with significant economic repercussions worldwide.

Meanwhile, bettors on prediction markets are voting on the possibility of a nuclear deal between the U.S. and Iran. The option with the highest probability as per the contract is “Before 2027,” which has a 58% probability as per bettors, up by 17%.

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