Oil prices spiked sharply on Friday amid growing fears that escalating conflict between Israel and Iran could disrupt global crude supplies. Wall Street analysts are warning that crude could surpass $90 per barrel, with extreme scenarios potentially pushing prices over $100 if broader regional instability unfolds.
Oil Markets React to Geopolitical Risks
West Texas Intermediate (WTI) futures settled at $72.98 per barrel, while Brent crude closed at $74.23. Both benchmarks had pared back from earlier overnight gains that saw prices spike more than 13%. The sudden surge reflects market anxiety over potential disruptions to oil production and transportation in the Middle East.
Supply Disruption Scenarios
Goldman Sachs analysts estimate that the conflict could temporarily remove 1.75 million barrels per day of Iranian supply over six months. While OPEC+ producers may offset some losses, Goldman projects Brent crude could briefly top $90 per barrel before retreating to the $60s by 2026 as Iranian output recovers. The bank also warns that a broader conflict or closure of the Strait of Hormuz—through which 20% of global oil supply flows—could push prices roughly 35% higher from current levels.
Extreme Scenarios Could Top $100
In a more severe scenario, Goldman believes prices could exceed $100 per barrel if an extended disruption materializes. JPMorgan previously forecasted Brent crude could surge to $120 under worst-case conditions. However, both firms view the complete closure of the Strait of Hormuz as unlikely and expect any sharp price increases to be temporary.
Demand Destruction Limits Price Upside
Despite the supply risks, analysts caution that sustained high prices would likely trigger demand destruction. JPMorgan’s Natasha Kaneva maintains a forecast range of $60 to $65 per barrel, noting that sustained price spikes could reignite inflation and reverse recent progress on lowering U.S. consumer prices. Hedgeye Risk Management’s Fernando Valle also emphasized that elevated oil prices would strain consumers and lead to rapid declines in demand.
Escalating Political Tensions
In response to Israeli strikes on its nuclear facilities, Iran launched drone attacks on Israel and described the strikes as a “declaration of war” in a letter to the United Nations. Some observers fear these actions could be a prelude to a larger missile conflict. Meanwhile, President Trump urged Iran to negotiate, posting on social media, “JUST DO IT, BEFORE IT IS TOO LATE.”
Conclusion
The Israel-Iran conflict has injected new volatility into global oil markets, with prices reacting swiftly to rising geopolitical risks. While extreme scenarios could drive crude prices above $100, analysts warn that sustained price levels that high are unlikely due to the risk of damaging global demand and triggering broader economic consequences.
