Oil Could Hit $150 Amid Gulf Shutdown
The market just showed, in one violent 24-hour swing, why this story is so dangerous. On Monday, Brent crude briefly surged above $119 a barrel, its highest level since 2022, as traders priced in a severe Middle East supply shock. Then on Tuesday it plunged about 15%, with Brent falling to $84.73, after President Donald Trump said the war with Iran could end soon and after a now-deleted post from U.S. Energy Secretary Chris Wright said the U.S. Navy had escorted a tanker through the Strait of Hormuz. That kind of whiplash might look reassuring from a distance, but it actually proves the opposite: the market is not calm. It is trapped between two radically different futures, and one of them still includes triple-digit oil that could go much higher.
The clearest case for that darker outcome came Tuesday from Wood Mackenzie. The consultancy said the war is currently cutting Gulf oil and oil-products supply to the market by about 15 million barrels per day, and that such a shock could push crude to $150 per barrel in the coming weeks. Its reasoning is brutally simple: Gulf countries produce about 20 million barrels per day of liquids, around 15 million barrels per day of exports have been taken out of the global market, and global demand of roughly 105 million barrels per day would have to fall sharply to restore balance. In Wood Mackenzie’s view, that kind of forced demand destruction likely requires Brent to spike to at least $150, and it added that $200 is “not outside the realms of possibility” in 2026.
That is not the same thing as saying $150 is the base case. It is a severe-case scenario tied to a prolonged shutdown of exports from the Gulf. But it is no longer a fringe scenario either. Saudi Aramco, the world’s biggest oil exporter, warned Tuesday that the consequences for global oil markets would be “catastrophic” if disruption in the Strait of Hormuz continues. Aramco’s CEO said this is the biggest crisis the region’s oil and gas industry has faced, said the company is not currently exporting oil from the Gulf because ships cannot load there, and warned that even with rerouting through the East-West pipeline, close to 350 million barrels could be disrupted.
That last point is the core of the whole story. Oil does not hit $150 just because traders are scared. It gets there when the market concludes that the barrels cannot move. The Strait of Hormuz remains the single most important chokepoint in global energy. The International Energy Agency says around 20 million barrels per day of crude oil and oil products moved through the strait in 2025, about 25% of the world’s seaborne oil trade. The U.S. Energy Information Administration similarly says flows through the strait averaged 20 million barrels per day in 2024, equal to about one-fifth of global petroleum liquids consumption, and that around one-fifth of global LNG trade also passed through it. If that artery clogs, the world does not lose a “regional” supply stream. It loses one of the main pipes feeding the whole system.
And by almost every public measure, that pipe is badly clogged right now. Reuters reported Tuesday that traffic through Hormuz has dropped 97% since the war began on February 28, that Iran has effectively closed the strait, and that at least 11 ships have been attacked since the conflict began. Insurance costs have surged by as much as 300%, which matters because shipping can remain frozen even before every last physical threat is neutralized. A waterway does not need to be completely impassable on paper to be commercially unusable in practice.
That is why the current pullback in prices should not be mistaken for proof that the crisis is over. The market sold off Tuesday because traders briefly leaned into the idea that the war might be shorter than feared and that escorted shipments could begin to move again. But the same Reuters report that described Tuesday’s plunge also quoted analysts warning that supply will not snap back quickly even if the fighting ends. Wood Mackenzie’s Simon Flowers said restarting the supply chain will not be swift, especially if wells have been shut in for a prolonged period. JPMorgan, cited in the same report, warned that policy measures may have limited impact unless safe passage through Hormuz is actually assured, given potential losses of up to 12 million barrels per day over the next two weeks.
That is the uncomfortable part of the $150 thesis: the market can fall hard on peace headlines and still be one bad turn away from exploding higher again. The baseline from the U.S. Energy Information Administration is already far above normal. In its March 10 Short-Term Energy Outlook, the EIA said Brent is set to trade above $95 a barrel over the next two months because the Iran war is disrupting supplies and because shipments through Hormuz have been largely blocked. It expects Middle East oil output to fall further in the coming weeks before recovering once transit resumes. In other words, $95-plus is the official U.S. government near-term case even without assuming the worst possible escalation. Wood Mackenzie’s $150 call is what happens when the disruption hardens into something more like a sustained Gulf export shutdown.
The market’s ability to absorb that kind of shock is also more limited than many casual observers assume. The IEA says there is only about 3.5 to 5.5 million barrels per day of available alternative export capacity that could bypass Hormuz through routes in Saudi Arabia and the UAE. The EIA gives a similarly sobering estimate, saying about 2.6 million barrels per day of Saudi and UAE pipeline capacity could be available to bypass the strait in a disruption. Either way, that is nowhere near enough to replace the nearly 20 million barrels per day that normally move through Hormuz. Even the backup plan is too small for the scale of the problem.
The political response tells you how seriously governments are taking that gap. Reuters reported Monday that G7 finance ministers were set to discuss a possible joint release of emergency oil reserves in response to surging prices. Reuters also reported that Trump’s team has considered easing sanctions on Russian oil and releasing emergency U.S. stockpiles to cool the market. Those are not normal-policy conversations. They are the sort of measures officials reach for when they fear the market may be about to price a genuine supply emergency rather than a temporary geopolitical premium.
The consumer and economic fallout is already showing up before any move to $150. Reuters reported that the U.S. national average gasoline price topped $3.50 a gallon Tuesday, up 17% from roughly $3 before the conflict began, and analysts said $4 gas is possible if the disruption persists. The same Reuters analysis warned that oil in the $85 to $100 range for several months would materially increase recession risk because higher fuel costs pull money out of other spending while also feeding inflation. If crude were to spend meaningful time at $150, the pain would not stop at the pump. It would run through diesel, shipping, aviation, food inputs, and household inflation expectations.
That is also why the “oil fell today” story can be dangerously misleading. Tuesday’s drop did not erase the structural problem. It just showed how desperate the market is for any sign that Hormuz might reopen. The deeper issue is still sitting there: a vast amount of Gulf production is stranded or constrained, safe passage is not yet restored, rerouting capacity is limited, and even industry leaders are warning of catastrophic consequences if the disruption lasts. Under those conditions, $150 is not a random scary number. It is a plausible clearing price in a world where too many barrels are suddenly stuck in the wrong place.
So the cleanest way to think about this article’s headline is this: oil does not need to be at $150 today for the threat to be real. It only needs the Gulf shutdown to keep looking persistent, the Strait of Hormuz to remain effectively unusable, and the world to realize that the detour routes are too small to save it. If that happens, the market will not care that crude briefly traded back in the $80s. It will care that the physical system underneath those prices still looks broken.
