Prolonged Strait of Hormuz crisis could drive oil near $200/barrel by year-end
As Iran continues to impose restrictions on maritime traffic, due to US war on Iran, through the strategically vital Strait of Hormuz, an estimated volume exceeding 11 million barrels per day of crude oil and condensate remains effectively stranded within the Gulf Arab states. This bottleneck represents a significant portion of the global oil supply approximately 20% of the global supply, underscoring the critical nature of the ongoing disruption.
According to a recent report by energy consultancy Wood Mackenzie, the situation could escalate further. The firm warns that if the blockade persists, it could rise oil prices toward an unprecedented level near $200 per barrel by the end of this year.Wood Mackenzie described the situation as “the single greatest threat to global energy markets in decades” and outlined two additional scenarios in its report. The first, called the “Quick Peace” scenario, envisions a settlement between the US and Iran that would reopen the Strait of Hormuz by June, allowing the global economy to return to its pre-conflict trajectory by the last quarter of the year.
In this scenario, the Brent crude oil price would drop from its current level of over $105 per barrel to around $80 per barrel, eventually falling further to about $65 per barrel by 2027 as the market becomes oversupplied again. Despite this optimistic outlook, the Middle East would still face a recession, and global GDP growth would slow from 3% in 2025 to approximately 2.3% in 2026.
If the conflict remains unresolved until September, Wood Mackenzie forecasts a “shallow” global recession, with GDP growth falling below 2% this year due to significant shortages in crude oil and liquefied natural gas (LNG) supplies.
The economic consequences would be far more severe if the Strait of Hormuz stays closed through the end of the year and the ceasefire collapses, leading to renewed armed conflict. Under this worst-case scenario, Brent crude prices could surge to nearly $200 per barrel, while diesel and jet fuel prices might skyrocket to around $300 per barrel. This would trigger a global recession,
