Oil Shock Loading? Analysts Aren't Ruling Out Brent At $200 Because Of These Factors

The market broadly agrees that the worst-case scenario for commodities, feared at the start of the US-Iran war in March this year, has failed to materialise. The worst that the oil market witnessed was in April-end, when Brent futures had climbed to as high as $126 a barrel. Despite the conflict still underway—with both sides appearing on the edge of escalating their military offensives—crude has met a stiff resistance at $110. 

That extreme scenario of oil hitting $200, that faded over the summer, is now back in the conversation. The world's biggest independent oil trader says only a makeshift shipping arrangement is keeping it at bay. Meanwhile, crude stocks in the Middle East and the West are near their limits.

For oil to rocket to $200, the rates would need to almost double. At present, December Brent futures are trading at $104.43 a barrel. Based on the views shared by market watchers, here are four factors that keep the scare of a nearly 100% jump in oil rates alive.

A Lifeline Under Fire

Gulf producers are keeping crude moving through ship-to-ship (STS) transfers. Smaller vessels carry oil through the Strait of Hormuz, then reload it onto large tankers in the Gulf of Oman.

Vitol Group CEO Russell Hardy says that shuttle is all that stands between the market and a price spike. "Without it, you do have that $200-a-barrel scenario," he told the Energy Intelligence Forum in London last week.

About 14 million barrels per day (12 million of crude, 2 million of products) left the Middle East over a recent 7–10 day stretch, according to Hardy. Before the war, the figure was around 20 million bpd.

The workaround is now under attack. At least 12 attacks on oil, LNG and LPG tankers took place around Hormuz in the week to October 5, Reuters reported, citing maritime security sources. Kpler said 10 tankers were struck between Sept. 28 and Oct. 4, a wartime record, and crude flows through the strait fell 27% in a week. The US Navy-led Joint Maritime Information Center says IRGC harassment, drone overflights and surveillance of merchant ships are continuing.

The shuttle is also squeezing the global tanker fleet. Vessels wait days or weeks in the Gulf for cargoes, taking them out of service elsewhere. "There is really not quite enough shipping to go around," Hardy said.

The numbers show the strain, with average crude tanker earnings topping $500,000 a day in early Oct., 10 times the 2025 average, according to ING's Rico Luman. The cost for shipping crude from Ras Tanura to Rotterdam surged to about $35 a barrel in September, rising multifold from about $2 a barrel last year. Freight and refinery margins could add more than $0.50 to the base price of a litre of diesel, ING estimates.

Notably, the Vitol Group chief is not the sole analyst to project this extreme case scenario of $200-per-barrel oil. UBS economist Alessandro Bee said last month that prices could reach if the Hormuz crisis prolongs. "If the Strait of Hormuz were to remain closed for several quarters, then oil reserves would eventually run out and the market could panic. In that case, we believe prices of between $150 and $200 are also possible," he told Keystone-ATS news agency on Sept. 11.

Gulf Storage Is Running Dry

Gulf producers have been drawing on storage to keep exports flowing, and that buffer is shrinking. Middle East onshore crude inventories stood at about 347 million barrels in mid-October. That is roughly 50 million barrels below the five-year average and under the bottom of the historical range, according to data shared by Shubham Garg, chairman of the board at Prospera Energy Inc.

Garg says stocks are hitting fresh multi-year lows every week. He also says Saudi Arabia's Red Sea inventories, including at Yanbu, are close to operational minimums, and exports from there have dropped significantly in recent days.

Yanbu matters because it is the outlet for Saudi crude piped across the kingdom via the East-West pipeline, avoiding Hormuz altogether. If tanks there run near empty, exports can only match what flows in each day.

ALSO READ: Brent $106, WTI $94: What's Behind The Widening Gap Between Oil Benchmarks

No Cushion Left In The West

The West has little left to absorb another shock. "There aren't any more inventories to drain in the West," Hardy said.

The US Strategic Petroleum Reserve held about 285 million barrels in early September, down roughly 130 million since March. With emergency stocks already drawn down, any fresh supply loss would have to be absorbed largely by price.

Refined fuels show where that pressure lands first. Diesel prices hit records above $200 a barrel in September. They have since eased, but the International Energy Agency said this week they remain nearly double crude prices and pre-crisis levels. Middle Eastern fuel exports are still below half of pre-war volumes, and the IEA expects the diesel crunch to last into 2027.

Is Paper Selling Capping Prices?

Some market commentators argue the futures market is hiding the true tightness. Chris Martenson, an economics researcher, said on X that heavy overnight selling of oil futures explains why prices aren't at $200 yet. He also alleged that the US Commodity Futures Trading Commission (CFTC) has backed off from investigating the suspicious trades.

His claim draws on a Bloomberg report published on Oct. 13. It concerns trades placed about 15 minutes before President Donald Trump announced on March 23 that he was backing away from threats to strike Iranian power plants. Billions of dollars of contracts betting on lower oil prices and higher US stocks were placed in that window.

CFTC market oversight analysts referred the trading to the agency's enforcement division, according to Bloomberg. Mel Gunewardena, a senior adviser to CFTC Chairman Michael Selig, then told a supervisor to retract the referral, Bloomberg reported, citing people familiar with the matter.

The Bloomberg report, however, concerns one episode around a single policy announcement. It does not establish sustained selling aimed at holding prices down, and Martenson's broader claim remains his own view.

What The Warnings Mean For India

India imports more than 85% of its crude needs, a large share from the Gulf, so it is exposed on every one of these fronts. Indian refiners are already paying as much as 35-40% more for crude than they were a month and a half ago, persons privy to the matter told NDTV Profit last month.

The final cost of crude for Indian refiners has risen to about $135-140 a barrel, compared with Brent futures at around $105-$109, the sources said. Some refiners have paid as much as $150 a barrel for prompt cargoes as competition intensifies for barrels that can be delivered on time, they added.

If crude costs escalate, and the fragile shipping arrangement worsens, then the estimated cost of Indian crude basket may spike. This would have a ripple effect on the country's retail inflation—which has overshot the central bank's 4% target for four straight months now—as the oil marketing companies may have to revise the pump fuel rates.

ALSO READ: What A Test Of $120-Oil Would Mean For India's Rupee, Inflation And Stocks

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