Oil prices could soar to $200 per barrel if the ongoing conflict in Iran extends through late June, according to insights from strategists at Macquarie Group. In a recent client note, the analysts emphasized that should the war continue into the summer months, it may necessitate a significant hike in oil prices—enough to “destroy an historically large amount of global oil demand.” This, they suggested, would likely require Brent crude prices to exceed $200 per barrel, resulting in U.S. gasoline prices potentially climbing to approximately $7 per gallon.
As of Friday, Brent crude futures were trading above $104 per barrel, sustaining gains of nearly 3% for the day, even as President Trump postponed his deadline for targeting Iranian domestic power infrastructure for a second time. Meanwhile, U.S. benchmark WTI crude was also showing signs of strength, trading above $96 per barrel.
Earlier in the conflict, oil prices surged to levels not seen since the early days of 2022, largely driven by geopolitical tensions following the Russian invasion of Ukraine. The Macquarie team, led by Vikas Dwivedi, placed a roughly 40% probability on the scenario where oil reaches $200 per barrel. They indicated that a more plausible outcome would be the cessation of hostilities by early April, leading to moderation in oil prices, minimal economic impact, and only a slight deceleration in global growth.
The strategists noted the market’s anticipation of an imminent declaration of victory by President Trump, observed through heavily backwardated oil and gas futures. However, the uncertainty surrounding what such a victory entails—combined with recent strikes on energy infrastructure—raises concerns that prices may need to increase significantly to encourage a resolution in the near term.
