Oil prices could rise above USD 100 per barrel if tanker traffic through the Strait of Hormuz does not resume quickly, consultancy Wood Mackenzie has warned. The strait is one of the world’s most important oil routes, carrying about 15 percent of global oil supply and nearly 20 percent of global LNG supply.
After US and Israeli attacks on Iranian government, military and nuclear facilities, Iran warned ships to stay away from the strait. Insurance companies withdrew coverage, effectively stopping tanker movements.
Oil Prices Jump On Supply Shock
Following the disruption, global oil prices surged. Brent crude rose more than 8 percent to USD 78.72 per barrel, while US crude climbed about 7.6 percent to USD 72.20 per barrel.
Alan Gelder, Senior Vice President at Wood Mackenzie, said the key question is when ships will restart export flows. If oil shipments remain blocked for more than a few days, prices could rise sharply.
He compared the situation to the early days of the Russia-Ukraine war, when fears of supply shortages pushed oil prices above USD 125 per barrel.
“In the current scenario, oil prices above USD 100 per barrel are possible if transit flows are not re-established quickly,” he said.
OPEC+ Output Plan May Not Help
Eight OPEC+ countries — Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman — recently agreed to increase output by 206,000 barrels per day in April. They plan to unwind earlier production cuts.
However, if the Strait of Hormuz remains closed, much of OPEC’s spare capacity will be inaccessible. Alternative routes, like Saudi Arabia’s East-West pipeline and Iraqi exports via the Mediterranean, cannot fully replace Hormuz shipments.
Strategic oil reserves from IEA countries may provide limited support, but they account for less than half of global oil demand.
LNG Markets Also At Risk
The disruption is not limited to oil. Around 81 million tonnes (110 bcm) of LNG passed through the strait in 2025, mainly from Qatar.
Massimo Di Odoardo of Wood Mackenzie said every week of halted flows could put 1.5 million tonnes of LNG exports at risk. This could spark competition between Asia and Europe for available supplies.
European gas storage levels are already below seasonal averages. A prolonged halt could push gas prices sharply higher, similar to the surge seen during the Russia-Europe gas crisis.
Impact On India And Global Economy
India imports about 88 percent of its crude oil needs, making it highly vulnerable to price increases. Higher oil prices would raise India’s import bill and fuel inflation.
Gelder said the closest comparison is the 1970s oil embargo, when prices jumped 300 percent . He added that oil would need to cross USD 200 per barrel today to create a shock similar to that era.
For now, markets remain heavily exposed to upside risks until Hormuz flows resume.
