Saudi officials are looking at a scenario they say they really don't want: oil barreling toward $180 if the Iran war keeps choking off supplies past April. Officials in the world's top oil exporter say their projections suggest benchmark Brent crude could break $150 by mid-April and then potentially climb to $165–$180 if the Strait of Hormuz remains effectively shut and physical shortages deepen, the Wall Street Journal reports. Brent futures already touched about $119 this week after Iranian strikes on Gulf energy infrastructure, including facilities in Saudi Arabia and Qatar. Anything over $146.08 would break a record set in 2008.
While soaring prices would swell Riyadh's revenues, they risk triggering "demand destruction" as consumers drive less, industries slow, and global recession odds rise—outcomes Saudi Arabia fears could damage long-term oil demand and paint it as a war profiteer. "Saudi Arabia generally does not like too-rapid increases in oil, because that then creates long-term market instability," analyst Umer Karim at the King Faisal Center for Research and Islamic Studies tells the Journal. "For Saudis, the ideal equation is a relatively modest increase in prices while their market share remains stable."
Traders are piling into options that pay off if Brent jumps to $130–$150 next month, and some analysts now see $200 "not outside the realms of possibility" this year. In the US, average gasoline prices have leapt to $3.88 a gallon, a level economists say functions like a tax on households and businesses and could stoke inflation while sapping growth. Goldman Sachs analysts warned Thursday that Brent could remain above $100 per barrel through the end of next year in scenarios with "lengthier disruptions and large persistent supply losses," CNN reports. In their best-case scenario, with oil moving through the Strait of Hormuz again next month, the price could be closer to $70 by the end of this year.
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