Wood Mackenzie Warns Oil Could Hit $200
by Andreas Exarheas | Rigzone Staff
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Wood Mackenzie said its analysis indicates that Brent crude prices could approach $200 per barrel by end-2026.
In a statement sent to Rigzone recently, Wood Mackenzie highlighted that, according to a new report from the company, “a prolonged closure of the Strait of Hormuz poses the single greatest threat to global energy markets in decades”.
Oil prices could reach $200 per barrel in a worst case scenario as more than 11 million barrels per day of Gulf crude and condensate supply remains curtailed, the statement noted, highlighting that Wood Mackenzie’s report projected three “distinct scenarios – quick peace, summer settlement, and extended disruption”.
Each scenario offers a different timeline for ending the conflict and reopening the Strait and assesses the potential impact on oil and gas supply, prices, energy demand and the broader global economy, the statement highlighted.
Under the quick peace scenario, a workable peace agreement is reached in the near term, and the Strait reopens by June, Wood Mackenzie said in the statement, adding that the global economy broadly returns to its pre-war trajectory by the fourth quarter.
“Crude prices fall sharply following a deal, with Dated Brent easing to around $80 per barrel by end-2026 and declining further to $65 per barrel in 2027 as the oil market returns to oversupply,” Wood Mackenzie projected.
“Global GDP growth slows from three percent in 2025 to 2.3 percent in 2026, with a recession limited to the Middle East. The global economy broadly returns to its pre-conflict trajectory by Q4 2026,” it added.
A summer settlement scenario assumes the ceasefire holds but negotiations extend into late summer, with the Strait remaining largely closed until September, the statement noted.
“Oil and LNG supply shortages persist through Q3 2026, driving a shallow global recession in H2 2026,” Wood Mackenzie said.
“Global GDP growth falls below two percent in 2026, resulting in modest yet permanent economic scarring compared to the pre-war baseline,” it added.
The statement warned that, “under the most severe scenario [extended disruption] the Strait remains largely closed through the end of 2026, with recurring tensions triggering periods of renewed conflict and sustained supply disruption”.
In the statement, Wood Mackenzie said its analysis indicates that Brent crude prices could approach $200 per barrel by end-2026, despite global oil demand falling by six million barrels per day year on year in the second half of the year, and that diesel and jet fuel prices could rise towards $300 per barrel in major refining centers by the end of the year.
“More than 11 million barrels per day of crude and condensate production remains shut in and global oil inventories continue to decline,” Wood Mackenzie projected in the statement under this scenario.
“The global economy could contract by as much as 0.4 percent in 2026, marking the third global recession this century, with significant economic scarring,” it warned.
“Oil and gas importing countries could intensify efforts to reduce their import dependence by aggressively pursuing faster electrification,” it went on to state.
Peter Martin, head of economics at Wood Mackenzie, highlighted in the statement that the Strait of Hormuz “is the most critical chokepoint in global energy markets” and warned that “a prolonged closure would become far more than an energy crisis”.
“The longer disruption persists, the greater the impact on energy prices, industrial activity, trade flows and global economic growth,” he added.
“The consequences of an extended disruption would extend well beyond energy markets. It would test the resilience of global trade, industrial supply chains and economic growth simultaneously, reinforcing the urgency of achieving a resolution,” he concluded.
Wood Mackenzie went on to warn in its statement that a prolonged conflict could accelerate structural changes across global energy markets.
“Even after the Strait reopens, intermittent disruption could continue and reinforce the geopolitical risk attached to both oil and LNG trade flows, creating a more volatile pricing environment and increasing pressure on import-dependent economies to strengthen energy security,” it said.
“In the extended disruption scenario, countries across Europe and Asia intensify efforts to reduce hydrocarbon dependence through accelerated electrification,” it added.
“At the same time, resource-rich producers outside the Gulf, including US LNG exporters, benefit from growing demand for supply diversification,” it continued.
Wood Mackenzie pointed out in its statement that its report “also highlights the increasing strategic importance of critical minerals supply chains as faster electrification and renewable deployment drive stronger demand for metals needed across clean energy technologies”.
In a market analysis sent to Rigzone on Thursday, Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, said crude “is being pulled between two major forces – geopolitical risk and demand uncertainty”.
“Prices came under pressure when markets priced lower immediate escalation risk in the Middle East, but the rebound shows traders are not ready to remove the supply-risk premium while the Strait of Hormuz remains central to global energy flows,” he added.
Aslam noted in the analysis that U.S. President Donald Trump’s comments are directly influencing the oil ecosystem and said yesterday’s economic data “added another layer to oil sentiment”.
“U.S. commercial crude inventories fell by 7.86 million barrels, the Strategic Petroleum Reserve dropped by 9.9 million barrels, and total crude inventories fell by around 17.8 million barrels to 819.2 million barrels, the lowest level in 11 months,” he highlighted.
“Refinery utilization stood near 91.6 percent, while crude exports reached around 5.6 million barrels per day, showing physical demand remains active,” he added.
“At the same time, private hiring strengthened to 42,250 jobs per week, up from 33,000, same-store retail sales rose 8.1 percent YoY, down from 9.6 percent, and pending home sales increased 3.3 percent YoY. This mix supports oil because the economy is not showing demand collapse, but it also keeps inflation pressure alive,” he continued.
Aslam projected in the analysis that today’s French, German, UK and U.S. flash PMI readings, U.S. Philly Fed Manufacturing Index, unemployment claims and Bank of England commentary “will decide whether oil trades more on demand or supply risk”.
“Stronger than forecast data would support fuel demand expectations and could lift crude, especially if manufacturing and services activity show resilience,” he said.
“Weaker than forecast data would pressure oil through softer growth expectations, unless geopolitical risk dominates again,” he added.
“At Zaye Capital Markets, we believe analysts should watch PMI new orders, jobless claims, refinery runs, OPEC supply signals, IEA demand revisions, crude exports, inventory draws and Strait of Hormuz headlines, because oil’s next move depends on whether markets fear tighter supply, weaker demand or renewed inflation more,” Aslam went on to state.
by Andreas Exarheas | Rigzone Staff
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas