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Oil could hit $200 if war prolongs, new report warns
Wood Mackenzie analysis finds 15 million barrels per day of oil going offline due to the US-Israel-Iran conflict, likely pushing crude to $150 a barrel
- PUBLISHED: Tue 10 Mar 2026, 4:38 PM UPDATED: Tue 10 Mar 2026, 10:58 PM
[Editor's Note: Follow Khaleej Times live blog amid US-Israel-Iran war for the latest regional developments.]
Oil prices could hit $150 a barrel because of 15 million barrels per day going offline due to the US-Israel-Iran conflict.
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And if regional military conflict prolongs and the Strait of Hormuz remains closed, oil could reach $200 a barrel as well.
According to new Wood Mackenzie analysis, global oil demand will need to fall to rebalance the market, which could push crude to $150 a barrel.
The analysis found that the Gulf countries, in total, produce 20 million barrels a day of oil, and 15 million barrels of exports have been taken out of the global market.
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“When the conflict ends, cranking up the supply won't be swift. Product barrels in storage at refineries or in port might be moved on vessels quite quickly. But if wells are shut-in for a prolonged period, restarting production to full output could take weeks or even longer,” said Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie.
After reaching close to $120 a barrel on Monday, oil prices plunged on Tuesday, dropping below $90 a barrel at 4 pm UAE time.
Wood Mackenzie noted that Europe faces especially acute challenges.
In 2025, Gulf refineries supplied 60 per cent of Europe's jet fuel and 30 per cent of its diesel – volumes which are now entirely cut off, it said.
Asia, which receives the majority of Gulf crude exports, faces equally severe pressure. Chinese, Indian, and other Asian buyers have been scrambling to secure alternative cargoes, driving up prices for West African and Latin American crude.
“Competition between Europe and Asia for limited non-Gulf supplies is intensifying price pressure across all regions. The prospect of extreme tightness in refined product markets is reflected in super-high crack spreads,” it said.
Alternatives
Strategic petroleum reserves offer some relief but cannot fully offset the supply loss. IEA member countries hold stocks equivalent to 90 days of imports, but sustained releases are unprecedented and IEA members account for less than half of global demand.
Meanwhile, alternative supply sources also cannot fill the gap. While higher prices could incentivise US producers to accelerate output and forego maintenance, the Lower 48 could add only a few hundred thousand barrels per day over three to six months—a fraction of the 15 million b/d shortfall. With no supply solution available, demand destruction becomes the only rebalancing mechanism.
Prices will continue to escalate if the conflict prolongs, according to Wood Mackenzie analysis.
“Much will depend on how long the war lasts, how long the Strait of Hormuz remains closed and if the US Navy can ensure safe passage of vessels by escorting shipping," said Flowers.
“Global oil demand of 105 million bpd would still have to fall to balance the market and that will require Brent to push up at least to $150 a barrel in the coming weeks."
While oil reached $150 a barrel in inflation-adjusted terms during the 2022 Russia-Ukraine crisis, this situation could prove more severe.
"Supply volumes at risk this time are dimensionally bigger—and real," said Flowers. “In our view, $200 a barrel is not outside the realms of possibility in 2026,” Wood Mackenzie concluded.
