Oil prices could climb as high as US$160 a barrel, or potentially even further, if disruption around the Strait of Hormuz persists and global inventories continue to fall, according to economists.
Brent crude has surged around 14% in two days after the US-Iran ceasefire broke down and President Donald Trump said Washington would block oil exports from Iranian ports.
Capital Economics said prices could rise into the US$140 to US$160 per barrel range, with the possibility of an even higher short-term peak if supply disruption proves prolonged.
The warning comes as global oil inventories have already been depleted.
The OECD said commercial stockpiles fell in June, even after the signing of the preliminary US-Iran peace deal that has since collapsed.
David Oxley of Capital Economics said the oil market was now more vulnerable to further supply shocks than it was earlier in the year.
He warned that a tipping point could be reached if oil flows from the region fail to recover over the coming months, particularly if energy exports resume more slowly or less extensively than expected.
The key risk, according to Capital Economics, is that continued disruption through the Strait of Hormuz coincides with already depleted inventories, leaving the global market with less capacity to absorb another major supply shock.
European Gas Prices Hit Four-Month High
European gas prices climbed to their highest level since March as disruption around the Strait of Hormuz intensified.
Dutch TTF, the benchmark European gas contract, rose as much as 4.8% to nearly US$54 per megawatt hour after US President Donald Trump suggested America could act as a “guardian” of the key shipping route and potentially charge vessels for safe passage.
Around a fifth of global oil and gas exports normally pass through the Strait of Hormuz, but traffic has been severely disrupted following US strikes and attacks on commercial vessels.
The UAE said Iran had attacked two tankers overnight, killing one sailor and injuring eight crew members.
Gas prices have been hit harder than oil during the conflict.
Dutch TTF is now around 67% higher than before the start of the Iran war, compared with a rise of roughly 20% for Brent crude.
The widening gap highlights growing concern over the vulnerability of global gas supplies if tanker traffic through the strait remains restricted.
