Market News

(Bloomberg) -- Oil may surge to $150 or $200 a barrel if the near-closure of the Strait of Hormuz persists over the next six to eight weeks because of the Iran war, according to energy-market consultancy FGE NexantECA.

“Every week, 100 million barrels of oil is not going through, and every month, 400 million barrels are not going through,” Chairman Emeritus Fereidun Fesharaki said in a Bloomberg Television interview with Haslinda Amin. “So, within a period of time, these losses to the market will be astronomical.”

Oil has roared higher this month as the war between the US, Israel and Iran rocks the Middle East, with the Strait of Hormuz closed to all but a handful of vessels and Persian Gulf producers shutting-in millions of barrels of daily supply. Futures were volatile Tuesday, with a fresh attack on a tanker lifting prices, but a report of President Donald Trump telling aides he’s willing to end the campaign with the waterway still closed boosting appetite for risk.

Fesharaki dismissed the effectiveness of verbal interventions — including those from President Trump about possibly ending the conflict — saying the physical reality of supply disruptions that would ultimately drive prices. “The market will choke, and the prices will go up,” he said. “It doesn’t matter what the president says on the political front.”

The outlook from Fesharaki for potentially much higher prices echoes other recent calls, with the crisis dragging on into a second month. Macquarie Group Ltd. has said that oil may hit $200 a barrel if the Strait of Hormuz stayed shut, while Societe Generale SA flagged scope for “credible spikes” toward $150.

Oil futures swung on Tuesday at the end of a volatile month, buffeted by a Wall Street Journal report that Trump is willing to end US military operations in Iran even if the Strait of Hormuz remains closed. Additional volatility was driven by another Iranian strike against a tanker in the Persian Gulf.

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Sarah Chen.

(Updates to add comparable outlooks in penultimate paragraph.)