Oil prices could reach $150 if war with Iran heats up again: Rystad Energy

Rystad Energy has warned that renewed hostilities between the US and Iran could drive crude prices sharply higher as supply disruptions deepen across the Gulf region

The latest escalation between the US and Iran has brought the April ceasefire to its most difficult moment so far, with crude prices rising and financial markets, including US equities, falling, according to Rystad Energy.

 

The Oslo-headquartered energy research and intelligence firm estimates that if hostilities were to resume in earnest, oil prices could move towards $150 per barrel. With 11.8 million barrels per day (bpd) shut in across six Gulf producers, the conflict has become the most severe supply disruption in the modern oil era.

 

“At this stage, it is too early to say whether the current escalation marks a full resumption of hostilities or a dangerous but still containable episode," Jorge Leon, senior vice president and head of geopolitical analysis at Rystad Energy, said.

 

 

He added that this uncertainty was also reflected in oil price movements, with Brent front-month prices rising sharply to around $94.5 per barrel before easing back closer to $93 per barrel.

 

Leon said the immediate impact of the disruption could be moderated by three primary factors: record levels of Strategic Petroleum Reserve (SPR) releases that have also resulted in record US exports, reduced crude imports by China, and the continued movement of around 5 million bpd of crude bypassing the Strait of Hormuz through Saudi Arabia's Yanbu port.

 

"What is clearer is that the probability of a near-term deal has narrowed from our prior assessment of around 40 per cent a few weeks ago. The direction of travel is now more uncertain, and the next few days will be critical in determining whether diplomacy can reassert itself or whether the conflict moves into a more sustained escalation cycle," he said.

 

As a result, oil price volatility is likely to remain elevated until there is clearer evidence that the ceasefire can hold or that diplomatic channels are regaining traction.

 

The Middle East war has erased around 1 billion barrels of cumulative crude supply from global markets in the three months since the first shots were fired, equivalent to two-and-a-half times the entire US Strategic Petroleum Reserve.