Global Oil Surges 10% on Iran Conflict; Analysts Warn Prices Could Hit $100 a Barrel

Global oil prices surged sharply after US and Israeli strikes on Iran escalated tensions in the Middle East, with analysts warning crude could approach or exceed $100 per barrel if disruption to key shipping routes continues.

Brent crude jumped 10 percent to around $80 a barrel in over-the-counter trading on Sunday, according to oil traders, as markets reacted to the growing conflict. Energy analysts said the main driver behind the rally is the potential closure of the Strait of Hormuz, a critical artery through which more than 20 percent of global oil supply passes.

Ajay Parmar, director of energy and refining at ICIS, said while military strikes are supportive of higher prices, the decisive factor would be whether the Strait of Hormuz remains open. Trade sources reported that most tanker owners, oil majors and trading houses have suspended shipments of crude oil, fuel and liquefied natural gas through the waterway after Tehran warned vessels against transiting the area. Parmar said prices could open closer to $100 a barrel and potentially move higher if the disruption is prolonged.

Helima Croft of RBC Capital Markets noted that Middle Eastern leaders have warned Washington that a broader war with Iran could push oil beyond $100 a barrel. Analysts at Barclays echoed similar projections, citing heightened geopolitical risk.

Meanwhile, the OPEC+ group agreed to raise production by 206,000 barrels per day from April, a modest increase representing less than 0.2 percent of global demand. Analysts said the supply boost may do little to offset potential losses if Hormuz shipments are significantly curtailed.

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According to Jorge Leon, economist at Rystad Energy, even with alternative routes such as Saudi Arabia’s East-West pipeline and Abu Dhabi’s pipeline, a closure of the Strait could remove between 8 million and 10 million barrels per day of crude from global markets. Rystad expects prices to climb by about $20 to roughly $92 per barrel when markets reopen.

The escalating Iran crisis has also prompted Asian governments and refiners to review oil stockpiles and explore alternative shipping routes and supply sources, underscoring the far-reaching impact of instability in one of the world’s most vital energy corridors.