①Israel launched attacks on Iran's nuclear and military facilities, leading to a surge in global oil prices. Analysts predict that the scale, nature, and duration of Iran's response will determine the impact of the Israel-Iran conflict on international oil prices; ②In the worst-case scenario, oil prices could soar to $120 per barrel.
According to financial news on June 16 (editor Huang Junzhi), last Friday, Israel launched an unprecedented attack on Iran's nuclear and military facilities, causing global oil prices to soar. On that day, Crude Oil Futures rose over 7% to $71.5 per barrel; Brent Crude Futures increased nearly 9% to $75.5 per barrel.
It is reported that this attack is the first round of direct military conflict this year after the two countries engaged in two rounds of direct military confrontation in 2024. Analysts point out that how the escalation of the Israel-Iran conflict affects international oil prices will largely depend on the scale, nature, and duration of Iran's response.
According to predictions from the geopolitical consulting firm Lazard Geopolitical Advisory, in the worst-case scenario, oil prices could soar to $120 per barrel.
The Israel Defense Forces stated that Iran launched dozens of missiles at Israel last Friday in retaliation. In the following days, airstrikes continued between both sides.
"The broader impact of this conflict on global markets mainly depends on Iran's response," the company’s analyst wrote in the latest report.
Four Possible Scenarios
Analysts have outlined four possible responses from Iran. They note that the most likely scenario involves Iran directly targeting Israel, which could lead to oil prices rising by $10 to $20 per barrel and result in increased energy and commodity costs in the region.
Secondly, Iran is also likely to target the United States' military or diplomatic assets in the Middle East, which could lead to oil prices rising to $80 or $90 per barrel. Analysts indicate that this poses a 'medium to high risk' to global markets.
The more serious consequence is that if Iran attacks oil and gas infrastructure in the Gulf region, oil prices could soar to between $85 and $105 per barrel, potentially causing global inflation expectations to rise. Lazard analysts state that this scenario seems less likely compared to the first two.
However, the worst-case scenario would be the disruption or closure of the Strait of Hormuz. This is a critical chokepoint for global energy trade. The oil flowing through this strait accounts for 21% of global liquid oil consumption, approximately 21 million barrels per day.
Analysts point out that while this scenario is currently unlikely to occur, if it does happen, it could lead to oil prices soaring to $120 per barrel, which would drive oil-driven inflation to crisis levels. They also noted that it could cause severe disruptions to global supply chains.
Coincidentally, George Saravelos, head of Forex research at Deutsche Bank, also mentioned this possibility. In a report, he noted that in the worst-case scenario of total disruption of Iranian oil supply and closure of the Strait of Hormuz, oil prices could exceed $120 per barrel.
"Given the significant global impact of such a closure, we view the potential closure of the strait as a last resort, to be considered only under extreme circumstances," he added.
JPMorgan also indicated that once larger-scale conflicts erupt in the Middle East leading to the closure of the Strait of Hormuz, oil prices could reach between $120 and $130.
Jackie Forrest, the Energy Research Director at Arc Financial Corp., also believes that escalating hostilities in the Middle East could lead to various price trends. She explained that if the conflict is resolved quickly, oil prices might soon return to normal. Alternatively, in an extreme and unlikely scenario, if the Strait of Hormuz were cut off, crude oil prices could surge above $100 per barrel.
However, in the view of Lazard Analysts, even if such a situation occurs, it is likely to be temporary, as it may provoke U.S. military intervention to restore shipping routes.
