Oil prices could hit $110 today if Iran retaliates

Oil prices are expected to explode past $110 today, after Iran promised “severe consequences” for the United States over launching direct airstrikes on its nuclear sites, dragging itself deeper into the ongoing war between Iran and Israel.

Analysts half-expect things to get worse today, according to a report from CNBC, warning that the entire global oil market and economy is at risks never seen before if Tehran responds militarily as promised. Iran’s foreign minister said the country has “all options” on the table to defend its sovereignty.

As of early Asian trading hours, US WTI crude jumped more than 2% to $75.22 a barrel, while global benchmark Brent crude pushed nearly 2% higher to $78.53.

Iran’s threat to shut Strait of Hormuz triggers new panic

Lawmakers in Tehran have approved a proposal to shut the Strait of Hormuz, a narrow waterway that carries almost 20% of global oil supply.

Andy Lipow, president of Lipow Oil Associates, said, “This time feels different, given the barrage of missiles that have been fired for over a week and now the direct involvement of the USA.” Iran’s decision to respond militarily, or even just harass shipping in the strait, could send prices sharply higher.

Saul Kavonic, senior energy analyst at MST Marquee, told CNBC that “even a degree of harassment” of tankers in that region could push oil to nearly $100 per barrel. A full closure that lasts several weeks would trigger Western military action to reopen the strait, he said. The real concern is that a prolonged event would take supply off the market, fast.

Bob McNally, president of Rapidan Energy Group, agreed that a military response by Iran could go far beyond just naval threats. If Iran targets energy facilities in the Gulf or directly hits LNG and oil infrastructure, prices won’t stop at $100. “A prolonged closure or destruction of key Gulf energy infrastructure could propel crude prices to above $100,” Bob said. He warned that if Iran used all its military options, the conflict could last “longer than the last two Gulf Wars.”

Goldman Sachs expects brief oil surge if flows get hit

Meanwhile analysts at Goldman Sachs also said the fallout from the US strikes on Iran has raised the chances of a serious energy supply crunch.

In a note led by Daan Struyven, the analysts said if flows through the Strait of Hormuz drop by 50% for just a month, and stay down by 10% for nearly a year, Brent crude could briefly hit $110 per barrel.

If Iran’s oil exports fall by 1.75 million barrels per day, prices could touch $90. That’s the bank’s projection, even though they still think full-on supply cuts are unlikely.

Goldman said both the US and China would have strong incentives to prevent that kind of sustained disruption. But they admitted, “the downside risks to energy supply and the upside risk to our energy price forecasts have risen.” That’s Wall Street code for: be ready for higher prices.

The impact wouldn’t be limited to oil either. European natural gas markets are also in danger. Goldman warned that TTF futures could jump to €74 per megawatt-hour, or around $25 per million BTUs. That’s close to the levels that crushed demand during the 2022 energy crisis. If the disruption drags on, prices could spike to €100.

Vandana Hari, CEO of Vanda Insights, said most traders are still sitting on their hands, watching for the next move from Iran. “The picture is a little bit mixed, and I think traders will err on the side of caution, not panicking unless there is more real evidence to do,” Vandana said. But nobody’s ignoring what’s happening.

The Strait of Hormuz, which links the Persian Gulf to the Indian Ocean, is one of the most important arteries in the global energy system. A real closure, or even the threat of one, means delays in shipments, panic buying, and a surge in volatility. The global oil market just entered a dangerous new phase, and the next move belongs to Iran.

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