Oil Could Hit $150 If Hormuz Is Blocked

The global oil market is facing a new challenge as tensions rise in the Middle East. This comes after Iran threatened to shut off the Strait of Hormuz, a critical global oil route.

According to market analysts, an oil shock has the potential to cripple economies across emerging nations by causing currency devaluation and high market volatility. For countries such as India, a surge in oil prices resulting from a Middle East conflict could mark a period of economic challenge.

Why Is The Strait Of Hormuz So Important To Global Oil Supply?

The Strait of Hormuz is the global economy’s windpipe. Controlled by Iran, this narrow gap is a critical link for Gulf tankers to the global shipping routes. Because 20% of the world’s oil and gas squeezes through here, any friction in the Strait instantly chokes global energy markets. Almost all crude exports from Kuwait, Qatar, and Bahrain pass through the strait. A large share of oil from Iraq, Iran, the United Arab Emirates, and Saudi Arabia also depends on this route, even after using alternative pipelines.

That is why Iran’s threat to block the passage has rattled markets. Tanker traffic has already slowed as Iranian forces reportedly targeted vessels in the waterway.

Some analysts warn that if shipments remain disrupted for weeks, global inventories could tighten rapidly. Goldman Sachs estimates that if flows remain restricted for about five weeks, Brent crude could approach $100 a barrel as markets struggle to balance supply and demand.

Could Oil Prices Really Surge To $150?

Several brokerages say the risk of a dramatic spike cannot be ruled out if the conflict worsens.

DBS Bank estimates crude prices could climb to $100 to $150 a barrel in an extreme scenario where the strait is fully blocked. Other analysts from JPMorgan and Bernstein also expect prices to cross the $100 mark if disruptions continue.

Brent crude has already reacted to the tensions. Prices jumped as much as 13% recently to more than $82 a barrel, the highest level seen since early 2025.

The conflict has also begun affecting production in the region. Iraq has reportedly cut output by about 1.5 million barrels a day after export routes were disrupted. If the situation worsens, officials warn that the country may have to shut down even more production.

Furthermore, drone attacks forced Qatar to halt operations at its Ras Laffan facility, one of the world’s largest liquefied natural gas export hubs.

Why Are Emerging Economies Particularly At Risk?

Because emerging economies depend heavily on energy imports, rising oil prices often hit them harder.

According to ING analysts, even a 10% increase in oil prices can widen current account deficits in emerging markets by 40 to 60 basis points. Countries such as Thailand, South Korea, Vietnam, Taiwan, and the Philippines are among those considered vulnerable.

Higher oil prices also feed directly into inflation. Goldman Sachs estimates that a rise in Brent from $70 to $85 could add around 0.7 percentage points to inflation in emerging Asia while trimming economic growth.

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What Does This Mean For India’s Markets?

India could be one of the most exposed economies if the disruption continues. About half of the country’s oil imports pass through the Strait of Hormuz, with roughly 2.6 million barrels a day moving through the route.

Strategists warn that rising crude prices could widen India’s import bill, pressure the rupee and weaken equity markets. Indian stocks have already lagged many global peers in recent months.

History proves how quickly markets panic over oil. When the Russia-Ukraine war hit, the Nifty index plummeted 10% almost immediately. Now, analysts fear a long Middle East conflict could drag it below 24,500, hammering travel and construction firms first.

Still, not everyone is pessimistic. A few strategists believe India’s long-term growth outlook remains strong and that markets could stabilise if geopolitical tensions ease.

For now, the direction of oil prices and financial markets appears closely tied to one question: Will the conflict escalate further or begin to cool?

Source

Economic Times