A fresh analysis by global energy consultancy Wood Mackenzie has flagged a severe risk to crude oil markets as conflict involving the United States, Israel and Iran intensifies. Analysts warn that up to 15 million barrels of oil per day could go offline if the war disrupts production and blocks critical shipping routes such as the Strait of Hormuz.
The report says such a large supply shock could push crude prices sharply higher, potentially to $150 or even $200 per barrel. The warning comes after oil briefly dipped below $90 earlier this week following a spike near $120, highlighting extreme volatility in global energy markets.
Simon Flowers, head of analysis at Wood Mackenzie, noted that restoring supply is not an instant process even if hostilities ease. While stored oil waiting at ports may enter markets quickly, restarting shut-in oil wells and stabilising logistics networks could take weeks or longer.
This lag could deepen shortages and sustain upward pressure on prices. Analysts argue that the current geopolitical risk exceeds previous disruptions, including the Russia-Ukraine conflict, which had already pushed oil above $150 at its peak.
Energy-importing regions have begun scrambling for alternative supplies. Europe faces a particularly tight situation because it relies heavily on Gulf producers for diesel and aviation fuel.
In the meantime, major Asian economies like India and China have started to look for cargoes from West Africa and Latin America. This worldwide scramble for a limited number of barrels has led to a fierce bidding war, which in turn has driven up prices in all markets.
The emergency petroleum reserves of several countries could provide a buffer against a short-term supply squeeze, which would cover 90 days of imports. However, analysts argue that these reserves are not sufficient to compensate for a supply gap of this magnitude.
In the end, it is demand destruction, which is brought about by a sharp increase in prices, that could restore balance to the market should the conflict persist. Without safe shipping routes and production, $200 oil could become a reality in 2026.