Brent crude could spike to $200 per barrel and push U.S. gasoline prices to about $7 a gallon if the Iran conflict continues through the end of June and the Strait of Hormuz stays largely closed to shipping, according to strategists at Macquarie.
The analysts presented two distinct outcomes for the oil market in their note. In the scenario they view as more likely - which they assign a 60% probability - hostilities ease relatively quickly, prices retreat from current levels near $108 a barrel, and the economic fallout remains contained.
However, Macquarie assigns a 40% probability to a second, far more disruptive outcome in which supply interruptions prove persistent and materially larger in scale. The strategists described that outcome as having consequences that would be historically unprecedented for modern oil markets.
Price dynamics and demand destruction
Macquarie’s strategists, led by Peter Taylor, highlighted the changing structure of global oil demand when explaining why prices would have to reach very high levels in the event of an extended disruption. "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," they wrote.
The firm estimates the immediate scale of the supply hit is already substantial. With the Strait of Hormuz mostly closed, Macquarie projects roughly 13% of global oil production will be shut in by the end of March. The strategists note that this would be a larger hit than the peaks seen in either of the 1970s oil shocks or the first two Gulf Wars.
By way of scale, world consumption of oil and oil products was almost 105 million barrels per day in 2025, according to the figures cited by the note. While International Energy Agency member emergency reserves - totaling more than 1.2 billion barrels - could blunt some of the immediate shortfall, the strategists caution that those stocks can only be released at a limited pace.
Some Asian countries are already experiencing physical shortages of diesel and jet fuel, the firm said. The note also warned: "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."
Economic consequences and policy responses
Under the scenario in which prices climb to $200, Macquarie projects talk would quickly shift to concerns about global recession. The team estimates that global growth could slow by about one percentage point relative to 2025, and central banks would confront a stagflationary environment - weak growth alongside elevated inflation.
In the United States, the strategists expect the Federal Reserve to face a difficult combination of near-zero or negative employment growth together with rising prices.
Still, Macquarie suggests a full-blown global recession might narrowly be avoided. Part of the mitigating factor would be government interventions to shield consumers and businesses from energy price shocks. Several governments have already taken action to subsidize energy costs, and the note specifically cites Japan and Italy as having moved in that direction.
Likelihood of a deal and market incentives
Despite the risk of a severe, prolonged shock, Macquarie’s base case remains for a relatively swift resolution. The note points to the enormous economic incentive to restore supply: with roughly 15% of global oil supply at risk of being withheld indefinitely under current conditions, the costs of a protracted disruption would be very large.
"It is that reality that underpins our view that a deal must eventually be made," the strategists wrote, underscoring the bank’s view that market and policy pressures will work toward reopening flows.
Key points
- Macquarie gives a 60% probability to a swift de-escalation with prices falling from around $108 a barrel and a 40% probability to a prolonged disruption that could push Brent above $200.
- With the Strait of Hormuz largely closed, the bank estimates about 13% of global oil production could be shut in by the end of March, exceeding the peak strikes of past major supply shocks.
- If prices reached $200, Macquarie projects global growth could slow by around one percentage point relative to 2025, and central banks would face stagflationary pressures; governments may step in to subsidize energy costs, as Japan and Italy already have.
Risks and uncertainties
- Duration of the closure of the Strait of Hormuz - the extent and persistence of shipping disruptions will determine whether the supply shock remains contained or becomes protracted, affecting sectors reliant on diesel and jet fuel.
- Limits to emergency stockpile releases - IEA member reserves of over 1.2 billion barrels provide a buffer, but constrained release rates mean physical shortages in some regions may persist.
- Macroeconomic response and policy choices - central bank and government actions, including subsidies already implemented in countries such as Japan and Italy, will influence whether higher prices lead to deep demand destruction or a milder economic slowdown.
Tags: oil, energy, commodities, supply, inflation