It will be a crude awakening if it comes true — analysts believe oil prices could reach $200 a barrel if the Strait of Hormuz remains closed.
Axios reported the news Wednesday, adding the estimates are based on worst-case scenarios, not current market conditions.
Forecasters are watching the prices closely as President Donald Trumpconsiders ending the war with Iran without reopening the strait.
Oil prices have gone up recently, briefly approaching $120 a barrel. U.S. gasoline prices have reached more than $4 a gallon.
“There is no policy option to prevent oil prices from marching up toward $200 a barrel if the Strait of Hormuz remains closed,” said Jason Bordoff, founding executive director of Columbia University’s Center on Global Energy Policy. “It’s too large of an amount of supply to the global market.”
Daniel Yergin, who hosted the world’s premier energy conference in Houston last week, did not want to give a specific forecast, but said, “You do hear $200.”
About 20% of global oil and liquefied natural gas comes through the Strait of Hormuz.
“Ships that escaped the Strait of Hormuz before [the war] began have reached port,” former Secretary of State John Kerry said last week at the Houston conference. “They’re empty now.”
Current prices have not reached projected extremes due to short-term supply factors, including oil already in transit and releases from strategic reserves.
Prices peaked below $150 a barrel in 2008 before falling during the global recession. Prices reached $139 per barrel in 2022 after Russia’s invasion of Ukraine.
The focus on $200 a barrel “is not an accident,” Kevin Book, managing director of research firm ClearView Energy Partners, said, as it echoes the 2008 record.
In 2008, “economic calamity” ultimately forced demand lower and rebalanced the market, he said.
If reopening the Strait doesn’t rebalance supply and demand — or if the Strait says closed for a long time — “then economic calamity is likely to follow,” Book said.
