JPMorgan Flags $120 as Iran Risk

Brent crude surged past $111 per barrel on Friday, marking its highest level since June 2022, as escalating disruptions in the Strait of Hormuz continued to rattle energy markets. Prices have climbed sharply in recent sessions, with traders reacting to supply risks and mixed signals around diplomacy. So, what happens next if the world’s most critical oil route stays constrained?

Source: Trading Economics

Strait Of Hormuz Crisis Drives Price Surge

Tensions in the Strait of Hormuz remain the central driver of the rally. Iran’s Islamic Revolutionary Guard Corps warned of a harsh response to any vessel movement, while reports confirmed that authorities turned away ships and incidents disrupted traffic further. A Thai-flagged cargo vessel also ran aground after an earlier strike, adding to concerns about safe passage.

Although some tankers managed to pass earlier in the week, the waterway still operates far below normal capacity. That matters because roughly 20% of global oil supply flows through this narrow channel. When movement slows, supply tightens almost immediately.

At the same time, geopolitical signals remain mixed. President Donald Trump extended the deadline for potential strikes on Iranian infrastructure to April 6, citing ongoing negotiations. Yet skepticism persists. Reports suggest the Pentagon is considering deploying up to 10,000 additional troops, raising the risk of further escalation.

Supply Shock Risks Build Rapidly

Analysts now warn that time is running out. Industry experts say the Strait needs to reopen within the next one to three weeks to avoid a deeper supply crisis. If that window closes, disruptions could intensify sharply.

Here’s the challenge. Alternative routes cannot fully replace Hormuz. Pipelines carry limited volumes, and rerouting options have already reached near capacity. Governments have released around 400 million barrels from strategic reserves to ease pressure, but these measures only buy time.

So the key question emerges: what happens when these stopgap solutions fade?

Some analysts believe markets have not fully priced in the worst-case scenario. Oil prices reflect a degree of optimism that flows will resume soon. However, if disruptions persist into mid-April, that optimism could fade quickly.

Banks Raise Forecasts As Uncertainty Grows

Major financial institutions have started adjusting their outlooks. Goldman Sachs raised its 2026 Brent forecast to $85 per barrel, citing what it described as the largest supply shock in modern oil market history. The bank expects flows to remain severely restricted for several weeks before any recovery begins.

Its projections suggest cumulative supply losses could exceed 800 million barrels under current conditions. Production disruptions across the Middle East already reach millions of barrels per day, with potential for further increases.

Standard Chartered also lifted its forecasts, pointing to sustained supply cuts across key producers. The bank estimates global output has already dropped by as much as 8 million barrels per day due to the conflict.

Meanwhile, JPMorgan outlined a more extreme scenario. The bank warned that prices could spike to $120 per barrel if the disruption becomes prolonged. It also highlighted a critical limit: Gulf producers may only sustain output for about 25 days under a full blockade before storage constraints force shutdowns.

Market Faces A Critical Turning Point

Energy markets now sit at a crossroads. On one hand, diplomatic efforts continue, with proposals and negotiations still in play. On the other hand, military developments and shipping disruptions point to ongoing risk.

Investors must weigh both sides carefully. Will negotiations reopen the Strait in time to stabilize supply? Or will the conflict extend long enough to trigger a deeper shock? Oil prices have already risen sharply since the conflict began, with gains exceeding 40% in some benchmarks. Yet the next phase may prove even more decisive.

For now, Brent crude holds near multi-year highs, reflecting a market caught between hope and uncertainty. The coming weeks will likely determine whether prices stabilize or move even higher.