Iran war: Oil prices could reach $150 a barrel
Oil prices could reach $150 (£112) by the end of the month if the severe disruption to the Strait of Hormuz is not eased, Goldman Sachs has warned.
The bank said it will revise its oil price forecast soon unless it sees evidence that transit through the crucial shipping route is beginning to return to normal levels.
The Strait of Hormuz flows between Iran and Oman and is a crucial trade passage for oil and gas, with as much as 20 per cent of the world’s petroleum liquid consumption having been carried through the channel in 2024.
The strait has been effectively closed at points since the US-Israel attacks on Iran, with a senior advisor in Iran’s revolutionary guard having warned to “attack and set ablaze any ship attempting to cross”.
Goldman Sachs had expected the flow of crude oil through the strait to fall to 15 per cent of normal levels but it said traffic has fallen to as low as 10 per cent of typical levels.
Impact worse than Ukraine war
In a note reported by The Guardian, analysts said: “Based on these new data, developments and the size of the shock, we now think that oil prices would likely exceed $100 next week if no signs of solutions emerge by then,” it said in a note on Friday night.
“We now also think it’s likely that oil prices, especially for refined products, would exceed the 2008 and 2022 peaks, if strait of Hormuz flows were to remain depressed throughout March.”
The bank has said the impact of the Iran war on oil prices could be 17 times larger than the peak of the Russia-Ukraine war, in April 2022, which pushed oil prices to $110 per barrel.
The price of US crude oil had already soared to over $90 per barrel on Friday, Reuters reported, marking the biggest one-day gain since 2020.
On Friday, Qatar’s energy minister warned the war and its effect on energy prices could “bring down the economies of the world”.
In the UK, food suppliers and importers have raised fears that the disruption in the Strait of Hormuz could spike shipping prices globally, which could make food more expensive.
Israel expanded its attacks on Iran’s energy infrastructure at the weekend, striking four oil depots and an oil transport centre in Tehran and the Alborz province.