U.S. crude oil prices surged above $78 per barrel on Thursday, March 5, reaching their highest level since January 2025.
The prices moved higher after Iran launched a fresh wave of attacks targeting Israel,U.S. bases and several countries across the region, justifying some earlier predictions in the process.
Expectedly, the growing hostilities have led to a lot of concerns about potential disruptions to oil and natural gas production and transport in the Middle East.
Indeed, a sustained surge in oil prices could pose a broader threat to the global economy. A selloff in the U.S. Treasuries already reached the fourth consecutive session today, as investors worried that rising energy prices tied to the Middle East conflict could rekindle inflation.
Will oil hit $100 per barrel?
U.S.-Israeli strikes have temporarily constrained oil exports from the Persian Gulf, where roughly 20% of global supply moves through the Strait of Hormuz. Brent crude recently climbed to a 19-month high, while the U.S. national average for a gallon of regular gasoline reached about $3.10 as early as Tuesday.
Several potential outcomes are possible depending on how the conflict evolves and whether energy infrastructure becomes a target. For example, strategists at J.P. Morgan estimate that crude prices could climb above $100 per barrel if tensions trigger broader attacks.
“It’s worth noting that Iran has repeatedly threatened to close the strait, but it has never followed through, likely given the fact that it relies on the same route for its own exports. We estimate that a full closure could push oil prices above $100 per barrel.”
A more extreme case would involve a complete shutdown of the Hormuz Strait due to mines or missile strikes. In such a scenario, Deutsche Bank analyst Michael Hsueh suggested in a Monday client note, oil prices could go toward $200 per barrel.
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