Morgan Stanley Warns: If US-Iran Conflict Persists Until June, Oil Price Could Surge to $200

On March 27, Morgan Stanley said oil could hit a record $200 a barrel if the Iran conflict lasts through June and the Strait of Hormuz stays shut. Analysts including Vikas Dwivedi noted in the report that an extended Q2 conflict would drive historically high prices, putting the odds of this scenario at 40%. The firm added that the strait’s closure—due to massive supply disruptions—has sent crude and product prices soaring. A 60% probability alternative sees the conflict wrapping up by month’s end. Brent crude is on track for a historic monthly gain in March as the U.S.-Israel-Iran conflict has roiled the oil-rich Middle East. Tehran authorities oversaw and nearly fully blocked the Strait of Hormuz, sharply curbing the critical flow of energy to the global economy. In the March 27 report, analysts said that if the strait stays closed long-term, “prices will have to spike to levels that wipe out historically massive global oil demand.” The timing of the strait’s reopening and damage to energy infrastructure are critical factors for evaluating the long-term impact on commodities. (Jin10)