Macquarie believes there is approximately a 40% probability that the conflict will extend until June. If this scenario materializes, oil prices will reach "historically high real price levels." A significant supply gap will force oil prices to surge, compelling a destruction of global demand to restore balance between supply and demand. There is a 60% probability that the conflict will conclude by the end of March.
Macquarie's latest warning indicates that if the US-Iran conflict extends into the end of the second quarter this year and the Strait of Hormuz remains blocked, international oil prices could surpass $200 per barrel, setting a new historical record.
On March 27, analysts including Vikas Dwivedi at Macquarie noted in their latest research report that there is a 40% probability of the conflict dragging on until June. If realized, oil prices would reach "historically high real price levels." In a scenario with a 60% likelihood, the conflict may conclude by the end of this month.
The near-complete blockade of the Strait of Hormuz has abruptly tightened the global energy supply landscape. Macquarie analysts stated that the blockade "has caused significant spikes in crude oil and refined product prices," with impacts so substantial that they will leave a mark in history.
$Brent Last Day Financial Futures (JUN6) (BZmain.US)$The increase in March has already set a record for the largest single-month rise in history, having previously reached a crisis high of $119.50 this month. If Macquarie's stress scenario materializes, the $200 price target would imply that oil prices nearly double from current levels and significantly exceed the 2008 peak.
Two Scenarios: Probability Distribution Determines Market Direction
Macquarie clearly outlined two pathways in the report.
The report indicated that under the baseline scenario (60% probability), the conflict is expected to conclude by the end of March, with the oil price shock gradually easing. In the stress scenario (40% probability), it is assumed that the conflict will extend through the entire second quarter, with the Strait of Hormuz remaining closed, forcing oil prices to rise to levels sufficient to significantly destroy global oil demand.
"If the strait remains closed for an extended period, prices will need to rise to levels capable of destroying historically large portions of global oil demand," wrote Macquarie analysts in the report.
At the core of this logic lies the demand destruction mechanism—when the supply gap is sufficiently large and prolonged, the market can only restore balance between supply and demand by relying on soaring prices to forcibly compress demand.
Blockade of the Strait of Hormuz: Global Energy Artery Severely Impacted
The Strait of Hormuz is one of the most important oil transportation channels globally.
According to Macquarie data, prior to the outbreak of the conflict, approximately 15 million barrels of crude oil and 5 million barrels of refined products passed through the strait daily. The near-complete blockade led by Iran has caused significant disruptions to the global energy supply chain that relies on this waterway.
Macquarie pointed out that the timing of the strait's reopening and the extent of actual physical damage to energy infrastructure are the key variables determining the long-term impact of this conflict on the commodities market.
According to an article by Wall Street News, US President Trump postponed the deadline for striking Iran’s energy facilities once again on Thursday, delaying it by 10 days and pushing the potential timeline for an attack to April 6. This marks the second time Trump has suspended the aforementioned threat.
Meanwhile, Iran allowed 10 oil tankers to pass through the Strait of Hormuz, which Trump characterized as a "gesture of goodwill" from Iran. However, this limited opening has not fundamentally altered the overall blockade situation in the strait.
Editor/Melody