Three more months of war in Iran could cause Brent crude oil prices to soar past US$200 a barrel, according to a report by Macquire Group Ltd. The ongoing conflict is the key factor in determining the global economy’s trajectory.
The report outlines two scenarios: one where the war ends by March, and another where it continues until June. If the conflict ends soon, oil prices are expected to drop but remain above pre-war levels. A prolonged war, however, could push prices to unprecedented heights, leading to potential global recession.
The closure of the Strait of Hormuz has already shut in about 13% of global oil production. Current oil prices hover around $90, but have breached $100 on some days. Strategic reserves might help mitigate short-term effects, but extended closure could lead to a $7 per gallon price tag on gasoline in the U.S., currently averaging $3.9 per gallon.
Macquire Group warns that if the Strait remains closed, prices would need to rise to unprecedented levels to reduce global oil demand, potentially triggering a market downturn.