No Longer a “Black Swan”: Analysts Are Once Again Discussing a Scenario of $150 Oil

Analysts have once again begun considering the possibility of oil prices rising to $150 per barrel following the deterioration of the situation in the Middle East, Barron's reported. At the start of the war with Iran, analysts were actively predicting precisely such a rise in prices, but the reality turned out to be more subdued. Now this scenario is possible again, although it remains unlikely for the time being, the publication notes.

Reaching $150 per barrel is currently considered the worst-case scenario for the energy market, according to Barron's. It marks a new all-time high following the 2008 record of $146.08 and suggests a global physical shortage of crude oil.

During trading on July 23, Brent crude oil futures were trading at around $96 per barrel, up 30% since the start of hostilities, but still below the March peak of $119.50. Earlier in the U.S.-Iran conflict, two key factors prevented prices from surging to $150: global reserves and a pause in purchases by China. However, these “safety nets” are now being depleted: commercial and strategic oil reserves in the U.S. have fallen to their lowest levels since 1983, Barron’s notes.

A scenario with oil at $150 could still play out in the event of a “full-scale regional war,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, in an article in Barron’s. “Although this is not my base-case scenario, it cannot be called a ‘black swan’ either, given the trend over the past ten days,” she noted.

The actions of the Iranian-backed Yemeni Houthis, who are capable of blocking the southern entrance to the Red Sea, pose a separate threat to the market. As Ryan McKay, director of commodity strategy at TD Securities, notes, a disruption across multiple routes at once is critical: “If traffic through the Strait of Hormuz remains minimal [...] and the Bab el-Mandeb Strait is also affected, along with disruptions to Russian exports, $150 per barrel—or even more—will once again become a real possibility.”

TD Securities views the $150-per-barrel scenario as a worst-case scenario rather than a base case. “Supply risks have risen significantly in recent days,” says Bart Melek, the firm’s global head of commodity strategy. Under its baseline forecast, the company expects Brent prices to peak at $108 per barrel by the end of September, followed by a decline to $90–100 by 2026–2027, assuming moderate traffic through the straits continues.

At the same time, experts acknowledge that high prices themselves could help prevent further conflict. Marco Papic, an analyst at BCA Research, highlighted the economic factor: “There is a certain level at which oil prices become so high and burdensome that it will change the behavior of both parties,” which, in the long run, could bring the U.S. and Iran back to the negotiating table.

On July 22, the Yemeni Houthis announced that they had struck two Saudi Arabian oil tankers, the Encelia and the Layla, with missiles and drones, because the vessels had violated the declared blockade against Saudi Arabia in the Red Sea. Following this, oil prices rose above $95 per barrel, and during trading on July 23, they exceeded $98.

This article was AI-translated and verified by a human editor