According to Rystad Energy, an intelligence firm based in Norway, the price of oil could soar to $150 per barrel if tensions between the United States and Iran escalate beyond the current critical phase of their ceasefire. The firm highlights that any renewed conflict would exacerbate supply disruptions in the Middle East, particularly as the threat of war and the nearly closed Strait of Hormuz continue to impact oil production.
Jorge Leon, Rystad Energy’s senior vice president and head of geopolitical analysis, commented on the situation, stating, “At this point, it is premature to determine whether the latest escalation signifies a complete return to hostilities or a precarious but manageable situation,” as reported by Business Standard.
Oil prices experienced a notable increase during Asian trading hours on Thursday, following U.S. military strikes in Iran and Tehran’s announcement regarding the closure of the Strait of Hormuz.
The recent escalation began with the downing of a U.S. Apache helicopter near the Strait on Tuesday, prompting the U.S. to target sites in Iran. Additionally, U.S. Central Command disabled a tanker in the Gulf of Oman as it attempted to breach the U.S. blockade of the Strait and did not adhere to U.S. orders.
This surge in tensions is considered the most significant challenge to the fragile ceasefire that has been in effect since early April.
Meanwhile, vessel traffic through the Strait of Hormuz has increased, with some ships turning off their transponders and navigating in dark mode. This development complicates the oil market’s ability to assess the actual supply moving through this vital chokepoint. Current estimates suggest that approximately 2 million barrels per day are passing through Hormuz, which is only a fraction—one-tenth—of the oil transport levels seen prior to the conflict.
Executives from major oil companies have begun to echo concerns about the possibility of $150 oil, noting that inventories, which have previously mitigated some of the supply shortfalls, are nearing critically low levels. Neil Chapman, Senior Vice President at Exxon, remarked during the Bernstein 42nd Annual Strategic Decisions Conference in late May, “We are nearing unprecedented inventory levels—extremely low levels.” He further stated, “Most analytical models predict that once inventory levels hit that critically low point, dated Brent could rise to $150 or even $160.”
Reported by Tsvetana Paraskova for Oilprice.com, via Financial Chronicle Biz English | Sri Lanka Business News.
