How Will the Iran Conflict Impact Oil Prices?

“However, oil prices can rise substantially more if the market demands a premium for the risk of more persistent supply disruptions,” Struyven writes. Brent oil, the international benchmark, closed at $77 on Monday, up from $72 on Friday and $61 at the end of last year.  

How much will oil prices rise if the Strait of Hormuz is closed?

Depending on the extent and duration of restrictions to transit through the Strait of Hormuz, Goldman Sachs Research estimates for the increase in oil prices range from $1-$15 per barrel:

• $15 for a full one-month closure if there are no offsets (e.g., utilization of spare pipeline capacity, releases of strategic petroleum reserves)
• $12 in the event of a full one-month closure if all estimated spare pipeline capacity, 4 million barrels per day (mb/d), is used
• $10 for a full one-month closure if all estimated spare pipeline capacity is used and global strategic petroleum reserves are released for one month at a 2 mb/d pace
• $4 for a partial, one-month closure of 50% if all estimated spare pipeline capacity is used
• $1 for a partial, one-month closure of 25% if all estimated spare pipeline capacity is used

What is the estimated short- to medium-term impact on oil prices?

History suggests that oil price spikes from geopolitical shocks and temporary supply disruptions can be short-lived.

Goldman Sachs Research finds that oil prices can rise significantly, and well above fair-value estimates, when geopolitical uncertainty is high and when market participants are concerned that supply disruptions could persist. In mid-2022, oil prices exceeded Goldman Sachs Research’s stocks-implied fair value estimate by nearly $20. Brent rose from around $65 in early June 2025 to the low $80s when Israel and the US struck Iran’s nuclear facilities. Prices quickly retraced when the market gained confidence that actual oil supply was unlikely to be disrupted.

How much oil and gas does Iran produce?

Iran produced around 3.5 mb/d of crude oil and about 0.8 mb/d of condensate (a hydrocarbon mixture produced along with gas) in 2025, together amounting to about 4% of global oil supply. Iran's 2025 exports averaged 1.7 mb/d for crude and condensates, 0.6mb/d for refined products, and 0.4 mb/d for natural gas liquids (NGLs).

The Strait of Hormuz is crucial for nearly 20 mb/d of global oil production. Saudi Arabia, Iraq, and the United Arab Emirates together exported 13.1 mb/d of oil via the Strait of Hormuz last year, with China as the main destination. The International Energy Agency has estimated that 4.2 mb/d of the oil flows through the Strait of Hormuz can be redirected using existing spare pipeline capacities, implying around 16 mb/d of oil flows are at risk from a full closure.

What does the conflict in Iran mean for natural gas prices?

There is significant risk that European gas and global LNG prices could climb higher, according to Goldman Sachs Research. The most critical impact to global gas markets would come from a disruption of the approximately 80 million tons per annum of LNG (19% of global LNG supply) that typically flow through the Strait of Hormuz.

In a scenario where LNG flows through the Strait of Hormuz are fully halted for one month, Goldman Sachs Research estimates that Dutch natural gas, or TTF, could approach 74 EUR/MWh. A hypothetical longer disruption of natural gas supply transit through the Strait of Hormuz lasting more than two months would likely lift European natural gas prices to more than 100 EUR/MWh. TTF natural gas traded at about 31.6 EUR MWh on Friday.

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