Macquarie warns: If the Iran conflict continues until June, oil prices could surge to $200

Macquarie’s latest warning states that if the conflict between the U.S. and Iran continues until the end of the second quarter this year and the Strait of Hormuz remains blocked, international oil prices could exceed $200 per barrel, setting a historical record.

On March 27, Macquarie analysts Vikas Dwivedi and others pointed out in their latest research report that the probability of the conflict dragging on until June is about 40%, and if this happens, oil prices will reach a “historically high actual price level.” In another scenario with a 60% probability, the conflict may end by the end of this month.

The near-total blockade of the Strait of Hormuz has sharply tightened the global energy supply landscape. Macquarie analysts stated that the blockade of the strait “has led to a significant surge in crude oil and refined product prices,” the scale of its impact is large enough to leave a mark in history.

Brent crude oil’s increase in March has already set a record for the largest monthly gain in history, having previously touched a crisis high of $119.50 this month. If Macquarie’s pressure scenario materializes, a price target of $200 would mean that oil prices would nearly double from their current levels and significantly exceed the peak in 2008.

Two Scenarios: Probability Distribution Determines Market Direction

Macquarie has clearly delineated two paths in the report.

The report indicates that the baseline scenario (60% probability) expects the conflict to end before the end of March, with oil price shocks easing accordingly; the pressure scenario (40% probability) assumes that the hostilities will continue throughout the second quarter, with the Strait of Hormuz remaining closed, at which point oil prices will be forced to rise to levels that could massively destroy global oil demand.

“If the strait remains closed for a long time, prices will need to rise to levels sufficient to destroy a significant amount of global oil demand historically,” Macquarie analysts wrote in the report.

The core of this logic lies in the demand destruction mechanism—when the supply gap is large enough and lasts long enough, the market can only rely on skyrocketing prices to forcibly compress demand in order to restore supply-demand balance.

Strait of Hormuz Blockade: Global Energy Artery Hit Hard

The Strait of Hormuz is one of the most important oil transport routes in the world.

Macquarie’s data shows that before the outbreak of conflict, approximately 15 million barrels of crude oil and about 5 million barrels of refined products passed through the strait daily. The near-total blockade led by Iran has severely impacted the global energy supply chain that relies on this route.

Macquarie pointed out that the timing of the strait’s reopening, as well as the extent of actual physical damage to energy infrastructure, are key variables determining the long-term impact of this conflict on the commodity markets.

According to an article from the Wall Street Journal, U.S. President Trump postponed the deadline for strikes on Iranian energy facilities again on Thursday, delaying it by 10 days and pushing the potential attack timeline to April 6. This is the second time Trump has suspended the aforementioned threat.

Meanwhile, Iran allowed 10 oil tankers to pass through the Strait of Hormuz, which Trump characterized as a “gesture of goodwill” from Iran. However, this limited opening has not fundamentally changed the overall situation of the strait’s blockade.

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