Oil prices might go up 15–20% if supplies from Iran drop significantly — Citi

An escalation of tensions between Iran and Israel could lead to a 15–20% increase in Brent oil prices compared to pre-conflict levels. Analysts at Citibank say such an outcome is possible if Iranian exports of crude are reduced by 1.1 million barrels per day.

This would cause the cost of Brent to rise to a range of $75–78 per barrel.

According to JP Morgan's projection, in case of much larger regional confrontation, resulting in the closure of the Strait of Hormuz, oil prices could surge to $120-130 per barrel.

Iran is OPEC's third-largest producer, pumping about 3.3 million barrels of oil daily. Citi expects that supply disruptions of about 3 million barrels per day for several months could raise the price of crude oil to $90 per barrel.

While the closure of the Strait of Hormuz could cause a sharp increase in prices, Citi believes it would be short-term. A potential decrease in exports and purchases by China due to higher energy costs could offset the impact of Iranian oil supply disruptions.