Having once again tested the level of $110 per barrel this past week, oil prices have seen an unprecedented run since the start of the conflict in the Middle East. But could oil prices reach new records beyond $150 and even that of $200, as some analysts believe?
U.S. President Donald Trump's latest belligerent tone over the Middle East war has reignited concerns about persistently high crude costs and the limited measures available to tackle the fallout.
Since the start of the U.S.-Israeli conflict with Iran on Feb. 28, benchmark oil prices have soared more than 50% largely owing to the Strait of Hormuz, through which normally one-fifth of the world's crude passes, shutting to most tankers.
French bank Societe Generale said $150 is a "credible" outcome on a prolonged war, while most analysts estimate crude hitting $130-$140.
Australian bank Macquarie forecasts that $200 crude is possible if the war continues in June.
And this does not take into account closure of the Strait of Hormuz combined with an attack on Kharg Island – through which the bulk of Iran's crude production travels – or disruption to another key trading route, the Strait of Bab al-Mandeb.
International benchmark Brent North Sea crude and the main U.S. contract, West Texas Intermediate (WTI), each soared to record highs above $147 in the wake of the 2008 global financial crisis before collapsing during the COVID-19 pandemic.
At around $110, consumers are already facing heavy financial pain, as prices of gasoline and diesel soar around the world.
In an unprecedented decision in response to the Mideast war, the 32 nations belonging to the International Energy Agency (IEA) pledged to unlock 426 million barrels, equivalent to more than one-third of their combined reserves.
The United States, itself a major oil producer, is to release 172 million barrels, or 40% of its strategic reserves.
These emergency releases "are not sufficient," UBS commodities analyst Giovanni Staunovo said, noting that the maximum pace of release is around 3 million barrels per day compared with 15 mpd failing to reach the market because of the war.
The conflict has already triggered a crisis more severe than the oil shocks of the 1970s and the one that followed Russia's invasion of Ukraine in 2022, IEA head Fatih Birol said on a podcast published earlier this week, adding that "April will be much worse than March."
The agency has identified about 40 key energy infrastructures damaged since the start of the Mideast war, which will each take time to repair.
For countries dependent on oil and gas transiting through the Strait of Hormuz, in particular those spread across Asia and Europe, the situation appeared bleak.
Three-quarters of the world's population lives in countries dependent on fossil fuels, according to energy think tank Ember.
Governments have less budgetary leeway to help businesses and households, with public debt potentially reaching 100% of gross domestic product (GDP) by 2029, a high since the end of the Second World War, according to recent projections by the International Monetary Fund (IMF).
Meanwhile, among political leaders and economic groups, many want the phasing out of fossil fuels to be accelerated.
A recent University of Oxford study claimed that a fully decarbonized energy system in the U.K would save an average household 441 pounds ($509) in annual bills compared with up to 82 pounds if all North Sea oil and gas wells were exploited.
In the short term, calls for energy-use moderation are multiplying, such as the European Commission's request to member states to reduce their oil demand, or Bangladesh's call for its civil servants to turn off lights and lower air conditioning.
Several countries, including Malaysia and Sri Lanka, are encouraging people to work from home if they are able to do so.
"The reality is, the economic shocks caused by this war will be with us for months," Australian Prime Minister Anthony Albanese warned on Wednesday.
