Iran war could send oil prices to record highs — Bloomberg
File photo: Analysts predict a significant rise in oil prices (Getty Images)
Oil prices could surge to a record $200 per barrel if the war in Iran continues through June and the Strait of Hormuz remains closed, according to Bloomberg.
Analysts at Macquarie Group Ltd. believe that the market will face historically high prices in the event of a protracted conflict. This is the baseline scenario (40% probability), though they consider it more likely (60%) that the war will end by the end of this month.
Analysts are convinced that if the strait remains closed for a long time, prices will have to be raised high enough to eliminate a significant portion of global oil demand.
The timing of its reopening, as well as potential damage to energy infrastructure, will determine the long-term consequences for the commodities market.
As of Friday, Brent crude was trading at around $110 per barrel following a recent spike to $119.50 per barrel.
Background
After the start of the US and Israeli operation in Iran was a sharp rise in global oil prices. This is due to the fact that Iranian forces blocked the Strait of Hormuz, through which Persian Gulf countries supply oil to the global market.
Following this, on March 13, it was reported that the US had temporarily eased sanctions against Russian oil and petroleum products. According to a diplomatic source cited by RBC-Ukraine, such a move is unlikely to stabilize global markets, but it could allow the Kremlin to finance the war for longer.
On Tuesday, March 24, Bloomberg reported that Russia’s oil revenue had returned to March 2022 levels. According to the agency, Moscow’s average daily revenue from raw material exports in March doubled compared to the start of the year, from $135 million to $270 million.
