(Investing) – could surge to $200 a barrel, pushing U.S. gasoline prices to around $7 a gallon, if the Iran conflict drags on through the end of June and the Strait of Hormuz remains largely closed to shipping traffic, Macquarie strategists warned in a note.
These fears were echoed by Egyptian President Abdel Fattah al-Sisi, who warned at an energy conference in Cairo that supply disruptions and rising prices could push oil above $200 per barrel, calling such projections realistic rather than exaggerated.
Egypt, which maintains close ties with the U.S. and Gulf states, has condemned Iran’s attacks on Gulf Arab nations and is actively supporting diplomatic efforts to prevent a broader regional conflict.
Macquarie laid out two scenarios for the oil market. In the more likely case, assigned a 60% probability, the war winds down soon, prices fall relatively quickly from current levels near $108 a barrel, and the economic damage remains contained.
But in the second scenario, which Macquarie puts at a 40% chance, the disruption proves far more durable, with consequences the strategists describe as historically unprecedented.
“With the global economy much less oil-intensive than 50 years ago, we would not be surprised if that would require historically high real prices (>$200) for a time,” strategists led by Peter Taylor said in the note.
The scale of the supply disruption is already striking. With the Strait of Hormuz mostly closed, Macquarie estimates around 13% of global oil production will be shut in by end of March — a hit already larger than the peak seen in either of the 1970s oil shocks or the first two Gulf Wars. In 2025, the world consumed almost 105 million barrels per day of oil and products.
Emergency stockpiles held by IEA members — over 1.2 billion barrels — would provide some buffer, but the strategists note these can only be released slowly. Some countries in Asia are already facing physical shortages of diesel and jet fuel.
“If the Strait were to stay closed for an extended period, prices would need to move high enough to destroy an historically large amount of global oil demand,” the strategists wrote.
Should prices reach $200, the team projects that talk would quickly turn to global recession, with growth slowing by around one percentage point relative to 2025. Central banks would face a stagflationary environment — weak growth alongside elevated inflation — with echoes of the 1970s.
In the U.S., the Fed would be confronted with near-zero or negative employment growth alongside rising prices, according to Macquarie.
That said, the strategists suspect a full global recession could be narrowly avoided, partly because governments would likely step in to subsidize energy costs, as several already have. Japan and Italy have already moved in that direction.
Overall, Macquarie’s base case remains a relatively swift resolution. With around 15% of global oil supply at risk of being held back indefinitely, the economic incentive to reach a deal is enormous.
“It is that reality that underpins our view that a deal must eventually be made,” the strategists said.
