Major analysts predict oil prices if Strait of Hormuz blocked
Major analysts predict oil prices if Strait of Hormuz blocked originally appeared on TheStreet.
The world has gotten a bit crazy in 2025.
An ongoing global trade war has sparked worries about worldwide economic growth, and now Israel and Iran are locked in a battle with missiles flying back and forth, threatening global oil supplies.
The potential for a major energy crisis to develop because of the Iran-Israel conflict has caused Brent Crude and West Texas Intermediate oil prices to surge, and in turn that's created an entirely new threat to the economy.
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The potential for the battle in the Middle East to spread, potentially shutting off oil seaborne transports through the Strait of Hormuz and possibly removing Iranian oil from the global market, has lifted Brent crude and WTI crude per-barrel prices by 18% to $79 and 21% to $75 this month.
The situation has captured the attention of Citigroup, JP Morgan and Goldman Sachs oil analysts, leading them to reset their oil price targets.
President Donald Trump this year has unveiled a string of harsher-than-expected tariffs to rekindle US manufacturing.
The moves, which include 25% tariffs on Mexico, Canada and autos, plus a 30% tariff on China and a 10% baseline tariff on all imports, have forced economists to rethink their global projections for economic growth this year.For instance, earlier this month the World Bank reduced its worldwide gross domestic product forecast to 2.3% from 2.7%, citing tariff uncertainty.
Contributing significantly to the reduced outlook is a major downgrade of U.S. growth to 1.4% from 2.3%. The World Bank lowered its U.S. forecast for 2026 to 1.6% from 2%.
The Federal Reserve also expects slowing growth in the US because of tariffs' bite.
The Fed updated its closely watched Summary of Economic Projections on June 18. It expects unemployment to increase to 4.5% from 4.2%, and projects that Personal Consumption Expenditures inflation — its favored inflation benchmark — will climb to 3% this year from expectations in March for 2.7% inflation.
Fed officials expect U.S GDP growth to be just 1.4% in 2025, down from 1.7% in March, and well below the 2.5% growth the US economy delivered in 2024.
In China, the World Bank expects slowing activity due to higher tariffs to reduce GDP growth to 4.5% in 2025 from 5% in 2024. In 2026, it expects GDP growth to ease to 4%.
The economic situation could get even more uncertain if the Israel-Iran conflict continues to prop up crude oil prices. Oil prices can significantly increase inflation, directly and indirectly, further crimping consumer and business spending.
We're already seeing concerning signs that higher oil prices are translating into higher prices at the pump for gasoline.
"WTI crude oil $77/barrel, the national average price of gasoline is now $3.21 per gallon and could by next week climb to its highest ever while President Trump has been in office ($3.25/gal)on due to Middle East tensions," wrote GasBuddy's Patrick De Haan on X.
Roughly 18 million to 19 million barrels of oil flow through the Strait of Hormuz daily, representing 20% of global oil consumption, including crude, condensates and fuel. Its proximity to Iran means it could become an oil chokepoint if Iran acts to block it.
The possibility of that happening is "under serious consideration,' said Esmail Kosari, an Iranian parliament member and IRGC general, on June 15.
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Iran's oil production and its ability to export oil to its largest consumer, China, might also be significantly impaired. Iran is OPEC's third-largest member, producing about 3.3 million barrels per day.
Citi estimates that if the conflict disrupts 3 million bpd for multiple months, crude oil prices could reach $90 a barrel from $75 now and from the low-to-mid $60s before Israel attacked Iran over its nuclear-development program.
JP Morgan's analysts say that shutting the Strait of Hormuz could catapult crude oil prices to an eye-popping $120 to $130 per barrel.
Goldman Sachs, meanwhile, says the conflict creates a risk premium of about $10 a barrel.
In one scenario, Goldman Sachs's analysts say that if Iran's export infrastructure is damaged to the point that Iran's supply is reduced by 1.75 million barrels a day, "before gradually recovering," and with OPEC+ production offsetting roughly half the reduction, Brent Crude oil would peak at "just over $90/barrel."
Goldman Sachs, however, expects that the increase would prove temporary, with prices declining "back to the $60s in 2026 as Iran supply recovers."
However, the situation would be worse if the Strait of Hormuz were blocked for an extended period.
"While an interruption of trade through the Strait of Hormuz, through which nearly 1/5 of global oil production flows, appears much less likely, there is focus from investors and policymakers on this risk, because core OPEC+ producers may be unable to deploy spare capacity in this extreme tail scenario," Goldman's analysts wrote.
"Based on our prior analysis, we estimate that oil prices may exceed $100/barrel in an extreme tail scenario of an extended disruption."Major analysts predict oil prices if Strait of Hormuz blocked first appeared on TheStreet on Jun 20, 2025
This story was originally reported by TheStreet on Jun 20, 2025, where it first appeared.
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