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Oil prices are rising sharply amid the war involving Iran, and an increasing number of energy executives and traders warn that global markets may be approaching a turning point. Several of them predict that oil prices could reach $100 per barrel within days, according to Bloomberg.
Shipping through the Strait of Hormuz has nearly come to a halt, triggering what was previously considered the worst-case scenario for energy markets. The number of empty supertankers in the Persian Gulf is rapidly decreasing, bringing producers closer to the point where they may have to cut output.
Although oil and gas prices surged this week, they still remain below the peaks recorded after Russia launched its full-scale invasion of Ukraine. On Friday, however, signs emerged that the oil market’s initial calm was fading, as Brent crude oil climbed above $90 per barrel, with weekly gains exceeding 25%.
Executives from four major trading companies, speaking anonymously, said the market may be underestimating the consequences of a prolonged blockade of the Strait of Hormuz. According to them, if hostilities do not de-escalate, oil prices could reach $100 per barrel within days.
Signs of tension in energy markets
Tensions are already visible in physical energy markets. Reduced operations at refineries in the Middle East and Asia have led to a sharp increase in refined product prices, particularly diesel fuel and jet fuel.
Bob McNally, president of Rapidan Energy Group and a former White House official, said the market is still trying to assess how long the Strait of Hormuz may remain closed.
“We expect Brent prices to reach $100 per barrel or more in the coming days or weeks once the market realizes that the Hormuz disruption could last weeks rather than being a short-term interruption,” he said.
A problem for Trump
Rising fuel prices pose a serious challenge for US President Donald Trump, who has repeatedly emphasized his ability to keep fuel prices under control.
Gasoline in the United States is currently more expensive than at any other point during his presidency. The White House has made several attempts this week to calm oil markets, but with limited effect so far.
For traders, the key question remains when energy supplies from the Persian Gulf region will resume. Each day without oil shipments through the Strait of Hormuz increases stockpiles and brings producers closer to the point where they may have to reduce output.
This week, Iraq has already begun cutting production, while Qatar halted liquefied natural gas output.
Bank and trader forecasts
Analysts at Goldman Sachs warned that there are significant upside risks to their oil price forecasts. Among the factors they highlighted were stricter-than-expected shipping restrictions in the Strait of Hormuz, limited capacity for Saudi Arabia to reroute exports to ports on the Red Sea, and the risk of a prolonged conflict.
According to analysts Daan Struyven and Yulia Zhestkova-Grigsby, oil prices could exceed $100 as early as next week if there are no signs of a resolution.
They added that the current supply shock is unprecedented and 17 times larger than the biggest disruption caused by Russia in the early weeks of the war in Ukraine.
Rapid rise in fuel prices
While Brent posted its second-largest weekly increase on record, some fuels are rising even faster:
diesel prices jumped more than 50% in one week;
jet fuel prices exceeded $200 per barrel in some regions;
natural gas prices in Europe rose by nearly two-thirds.
In response, China ordered its largest refineries to halt exports of gasoline and diesel. Similar measures were introduced by several other Asian countries.
Meanwhile, Qatar’s energy minister warned that oil prices could climb as high as $150 per barrel if the conflict is not resolved quickly.
Physical oil market reaction
Prices for physical oil cargoes are also surging, signaling strong demand for immediate deliveries. Some US crude grades are trading at their highest premium since 2020.
Norway’s key crude grade, which usually moves closely with Brent, traded more than $5 above the benchmark this week. Saudi Arabia also raised its official selling prices for oil by the most since August 2022.
Countries in the region are attempting to reroute supplies via alternative routes. Saudi Arabia is transporting oil more than 1,000 kilometers across the country to western ports, while the United Arab Emirates exports over 1 million barrels per day through the port of Fujairah, bypassing the Strait of Hormuz.
