- Macquarie warns crude oil could hit $200 if Iran conflict blocks Strait of Hormuz through June
- Brent crude rose above $111 as tensions keep energy markets volatile amid Iran's control of the strait
- Strait closure would sharply cut oil supply, forcing prices high enough to reduce global demand
Brokerage firm Macquarie warned on Friday that crude oil prices could surge to $200 a barrel if the Iran conflict drags on through June and the Strait of Hormuz remains shut, assigning a 40% probability to that worst-case outcome.
The warning came as Brent crude continued to trade near crisis levels and traders watched the world's most important oil chokepoint for any sign of easing.
Also Read: US-Iran War: Kharg Invasion Could Rattle Global Energy System For Years, Warns Expert
The conflict, now over a month old, has already unsettled major oil-producing regions. Iran's control over the strait, which carries a major share of oil shipments to Asia, has added to the volatility in energy markets.
"If the strait were to stay closed for an extended period, prices would need to move high enough to destroy an historically large amount of global oil demand," Macquarie's note stated. "The timing of the re-opening of the straits, and physical damage to energy infrastructure, is the main determinant of the longer-term impact on commodities."
According to the report, Macquarie said a prolonged conflict into the second quarter could push oil into “historically high” real-price territory, while a quicker de-escalation by the end of this month remained its more optimistic 60% scenario. The firm said the key factor for the longer-term impact would be when the Strait reopens, along with any physical damage to energy infrastructure.
The Strait of Hormuz has become the main source of market anxiety because it carries a large share of the world's oil and liquefied natural gas shipments. As per reports, two Chinese vessels were turned back after trying to pass through the strait, underscoring that Iran continues to restrict movement through the route. It happened despite Iranian assurances of safe passage for friendly nations.
Oil prices also reflected the tension. Brent crude for May delivery rose 2.82% to $111.06 a barrel and West Texas Intermediate gained 2.68% to $97.01.
Prices climbed on Friday even after US President Donald Trump extended a pause in attacks on Iran's energy infrastructure and gave Tehran more time to reopen the strait.
Also Read: US Troop Movements Fan Fears Of A Risky Ground Attack On Iran
Trump's 10-day extension did little to calm markets, with traders still focussed on the risk of a deeper disruption to global energy flows.
Trump said talks with Iran were going well and paused attacks on Iranian energy infrastructure through April 6, while the market remained fixated on whether the blockade would continue long enough to force a major reset in oil demand and prices.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.