Oil prices may hit $150 per barrel soon if Iran war continues, energy economist says

Brent crude is around $94 a barrel, with Rystad Energy's Claudio Galimberti warning oil could hit $150 within the next couple of months if Middle East fighting persists and inventories keep falling. He said solving the crunch may require Strait of Hormuz flows to rise to 10 million barrels a day from 2 million over the next three to six months, but stressed the market is currently far from that point. The outlook also includes a potential 2027 oversupply if OPEC unwinds production cuts, adding to volatility across oil and broader risk assets.

Analysis

The market is pricing a supply shock, but the more actionable read is that the curve is vulnerable to a violent front-end squeeze rather than a clean long-duration bull market. With inventories already thin, any additional interruption tends to express first in prompt spreads and refined-product cracks, which means the fastest P&L is likely in calendars and crack structures, not just outright crude. That favors upstream producers and undermines airlines, chemicals, trucking, and discretionary consumer names with limited hedging runway.

The second-order risk is policy and logistics, not geology. If flow through a key chokepoint normalizes even partially, the market can reprice down much faster than it repriced up because speculative length is being built on a binary headline regime; conversely, a failed diplomatic path could force importers to bid for term barrels and floating storage, extending the squeeze for several months. The setup is especially dangerous for Europe and Asia, where marginal energy inflation can hit industrial margins and FX simultaneously.

The longer-dated contrarian point is that supply destruction and OPEC discipline may be setting up a much looser 2027 than consensus expects. If producers chase current prices and the geopolitical premium fades, the forward curve can flip into contango, punishing passive commodity longs even if spot stays elevated for a while. That argues for expressing bullishness tactically in the near end while staying skeptical of owning unhedged exposure beyond the next 6-12 months.

Key Decisions for Investors

• Go long front-month Brent exposure versus deferred Brent (calendar bull spread) for 1-3 months; target is continued inventory draw and geopolitically driven backwardation, with risk limited if diplomatic flow resumes.
• Buy XLE or a basket of high-beta E&Ps versus short airlines/transportation (e.g., JETS or XTN) for 4-8 weeks; oil producers monetize immediate price spikes while fuel-intensive sectors face margin compression.
• Enter a refined-products crack spread long (gasoline/diesel vs Brent) for 1-2 months; if prompt supply tightens, product markets often outperform crude on a percentage basis.
• Use upside call spreads on select integrated producers or oil services names over the next 2-3 months; asymmetric upside if Brent gaps higher, but cap premium in case the shock fades quickly.
• Fade broad commodity ETFs on rallies after a ceasefire headline by shorting USO against a long in energy equities for a tactical pair trade; equities can retain cash-flow support even if spot oil retraces.