As tensions between the United States and Iran show signs of escalating into full-scale conflict, a forecast suggests that international oil prices could soar to $125 per barrel if the U.S. reinstates its blockade on Iranian oil.
On July 13, financial information platform Seeking Alpha reported that Robin J. Brooks, an economist at the Brookings Institution, predicted that Brent crude prices could rise by approximately 50% from the September futures closing price of $83.30 per barrel if military clashes between the U.S. and Iran escalate into a full-blown war.
Brooks based his oil price projections on the assumption that the U.S. would again block Iranian oil exports. He estimated that disruptions in shipping through the Strait of Hormuz and alternative export routes could reduce oil exports from the Persian Gulf region from about 20 million barrels per day to 8 million barrels.
He applied a price elasticity of demand for oil of about 0.15, suggesting that Brent crude prices would need to rise by about 80% from the pre-escalation level of $70 per barrel to reach around $125.
However, Brooks noted that the likelihood of prices exceeding this level is low. His estimates do not account for the effects of strategic petroleum reserves (SPR) releases from the U.S. and other countries. In previous escalations of U.S.-Iran tensions, the release of strategic reserves helped mitigate supply shocks, preventing oil prices from reaching anticipated peaks.
Brooks assessed that the current oil market has more capacity to respond to supply shocks than it did earlier this year. Countries have adjusted their oil import sources and utilized reserves, and alternative supply chains have been established, suggesting that any renewed conflict may result in less market disruption than in the initial escalation.
He also argued that while the resumption of U.S. sanctions would significantly impact the Iranian economy, the shock to the global oil market would remain manageable. He contended that it is preferable to limit Iranian oil exports to increase economic pressure rather than allowing Iran to exert influence over shipping operations in the Strait of Hormuz.
Meanwhile, President Donald Trump announced plans to reinstate maritime blockades against Iran, with U.S. Central Command (CENTCOM) stating via social media that the blockade would commence at 4 p.m. EDT on July 14 (5 a.m. KST on July 15).
* This article has been translated by AI.
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