Global crude oil prices could escalate to $200 per barrel in the worst-case scenario if the Strait of Hormuz remains closed, according to a report from Wood Mackenzie. Since the onset of the Iran war in February, global energy markets have experienced heightened volatility, leading to rising oil prices and increasing concerns over inflation and interest rate hikes.
The report details three scenarios regarding the timeline for reopening the Strait of Hormuz and the subsequent effects on oil and gas supply, prices, energy demand, and the broader global economy. Current restrictions have curtailed more than 11 million barrels per day of Gulf crude and condensate production, while over 80 million tonnes per annum of liquefied natural gas (LNG) supply, representing 20 percent of the global total, is also affected.
“The Strait of Hormuz is the most critical chokepoint in global energy markets, and a prolonged closure would become far more than an energy crisis,” stated Peter Martin, head of economics at Wood Mackenzie. He added, “The longer disruption persists, the greater the impact on energy prices, industrial activity, trade flows, and global economic growth.”
In the most optimistic scenario, termed “Quick Peace,” a resolution between the conflict parties by June would allow for immediate relief in the global economy, with Brent crude prices predicted to ease to around $80 per barrel by the end of 2026 and potentially falling to $65 per barrel in 2027.
The “Summer Settlement” scenario envisions negotiations extending into late summer, with the Strait largely remaining closed. Under this scenario, oil and LNG shortages could continue through the third quarter of 2026, with risks of a shallow global recession in the latter half of that year.
The worst-case scenario anticipates the Strait remaining closed through the end of 2026, with escalating tensions further limiting oil supply. In this situation, oil prices could surge to $200 per barrel, even as global oil demand may decline by 6 million barrels per day in the second half of 2026. The global economy could contract by as much as 0.4 percent in 2026.
Additionally, the report suggests that an extended disruption would prompt renewed interest in alternative energy sources. Countries in Asia and Europe might reduce their reliance on hydrocarbons and increase electrification efforts. The outlook for U.S. LNG exporters appears positive, as demand for supply diversification grows.
Published on May 22, 2026.
