The ongoing conflict involving the US, Israel, and Iran is sending shockwaves through the energy world. According to a fresh report from Wood Mackenzie, we are looking at a massive supply gap of 15 million barrels of oil every single day. If the situation doesn’t settle and key shipping routes like the Strait of Hormuz stay blocked, experts warn that prices could skyrocket to $150—or even $200—very soon.
While prices took a sudden dip below $90 earlier this week after hitting nearly $120, the long-term outlook remains shaky. Simon Flowers, the head analyst at Wood Mackenzie, points out that even when the fighting stops, we can’t just flip a switch to get the oil flowing again. While bottled-up reserves at ports might move quickly, getting shut-down oil wells back to full capacity could take weeks or even longer.
Europe and Asia scramble as supplies dry up
Europe: The region is in a tough spot because it usually relies on the Gulf for a huge chunk of its diesel and jet fuel. With those taps turned off, the continent is facing a massive energy squeeze.
Asia: Countries like China and India are desperately hunting for oil from places like West Africa and Latin America.
The Global Bidding War: Because everyone is chasing the same limited amount of oil from outside the Middle East, prices are being pushed higher for everyone, everywhere.
Can anything stop the price hike?
While many countries have emergency stockpiles (which is enough to last about 90 days), it’s not enough to cover a gap this size. Even if the US tried to ramp up its own drilling, it would only add a tiny fraction of what’s been lost.
Ultimately, if the supply isn’t there, the only way the market stays “balanced” is if prices get so high that people simply stop buying. Flowers noted that while we saw $150 oil during the Russia-Ukraine crisis, this situation is actually much bigger and more dangerous.
If the war drags on and shipping lanes aren’t secured by the Navy, $200 a barrel is a very real possibility for 2026.