The war in the Middle East continues and the Strait of Hormuz remains closed to most ships. Investors must be prepared for all scenarios, including those involving months of fighting.
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Donald Trump suggests that negotiations between the US and Iran are ongoing. Tehran denies this. On Monday, after the US President announced the suspension of American airstrikes for five days, oil prices fell by several percent, well below $100. per barrel.
However, on Tuesday, Brent crude oil costs around $100 again. after overnight fighting between Israel and Iran dampened hopes for an early end to the war. Before the conflict, the raw material cost approximately $70.
What's next for oil prices, inflation, global trade? Who will benefit and who will lose? Much depends on how long the conflict will last. Here are four possible scenarios, writes Matthew Ryan, head of research at Ebury.
War in the Middle East. Scenario 1
This scenario assumes an immediate ceasefire, truce before the end of Marchopening the Strait of Hormuz and restoring traffic through the strait within the next two weeks. Ebury rates the probability of such a scenario is low (25%)..
Oil prices: In this scenario, oil prices could drop by 30% in a matter of days. or more, as has been the case throughout history. The scale of the movement would depend on whether the Strait of Hormuz opens partially or fully.
Inflation: Very limited inflation implications. No risk to global growth.
War in the Middle East. Scenario 2
The second scenario assumes a short conflict and a quick opening of the Strait of Hormuz. In this scenario, de-escalation begins before the end of March, the war ends in the next 4-5 weeks (i.e. before April ends); oil transport through the strait resumes within the next month. Ebury assesses the probability of such a scenario as medium (50%), which includes 25%. chances for scenario 1.
Oil prices: In this scenario, oil prices peak near recent highs and decline sharply once the war ends. Unlike in the case of the Russia-Ukraine conflict, the supply shock would be temporary provided that the Strait of Hormuz is fully (or almost fully) opened.
Brent oil prices could stabilize at $80-90. International Energy Agency (IEA) oil reserves would be used to absorb the supply shock in the short term (3-4 weeks).
Historical precedent suggests a rapid reversal of the trend, says Ebury. During the First Persian Gulf War (1990–1991), oil prices doubled from July 1990 to the end of the year; after the conflict ended, they dropped by 33% in one day. and by mid-1991 they had returned to pre-invasion levels.
Inflation: Moderate increase in inflation by 0.1-0.2%. Limited impact on global economic growth.
Trade flows: Temporary disturbances in the Strait of Hormuz. Tanker traffic resumes shortly after the mines are cleared. Trade routes are only slightly changed.
War in the Middle East. Scenario 3
The third scenario assumes no quick resolution or signs of de-escalation within a few weeks. The war lasts another 2-6 months. The Strait of Hormuz is closed (or largely impassable) for 1-3 months, not a few weeks. Ebury assesses the likelihood of such a scenario as medium (30%).
Oil prices. In this scenario, oil prices would likely exceed recent highs ($118) and could stay at around $120-150. per barrel. The release of IEA reserves would only cover the 3-4 week closure of the Strait of Hormuz.
Inflation: Global inflation would increase by 0.5–1.0 percentage points. The effects of the second round of inflation (wage and price pressure) would intensify over time, potentially leading to a de-anchoring of inflation expectations. Closing the Strait of Hormuz could reduce global GDP growth by 0.2–0.5 percentage points. (mainly through higher prices, with supply chain disruptions and uncertainty increasing the effect).
Trade flows: Supplies from the Middle East – especially oil and LNG – to Asia and Europe would decline significantly (by sea by 60-75%). Importers of energy raw materials would start to switch to alternative sources of supply:
— exports of oil and LNG from the USA to Asia (+30-50%),
— oil exports from Brazil to China, India and Europe (+25-50%).
In this scenario gains energy, defense, sea freight They are losing: agriculture and food production (Iran and nearby countries are the main exporters of ammonia fertilizers), tourism (especially aviation).
War in the Middle East. Scenario 4:
In this scenario, the war lasts at least six months. The Strait of Hormuz remains closed (or only partially open) for months. The conflict may escalate and spread to the entire region. Ebury assesses the probability of such a scenario as low (20%).
“Shortages of ammunition and navy may make closing the Strait of Hormuz an essential strategic survival mechanism. Iran cannot win in a direct clash, so it relies on perseverance and a war of attrition,” the analysis reads.
Oil prices. In a worst-case scenario, Brent crude futures prices could increase to $150 per barrel or above.
Inflation: Long-term stagflation in major economies. Global inflation could increase by 1.0–1.5 percentage points, which would lead to the consolidation of second-round effects (wage-price spiral, higher food prices and de-anchoring of inflation expectations).
Flows of energy resources from the Middle East to Asia and Europe would be severely disrupted (70-95% decline or complete collapse). Exports of non-energy goods would also decline.
Alternative transport corridors for energy raw materials would probably be created:
— oil and gas LNG from the USA to Asia and Europe,
— oil from Brazil to China, India and Europe,
— oil and gas from Norway to the rest of Europe,
— LNG gas from Canada and Australia to Asia.
In this scenario gains energy (outside the Persian Gulf), defense, renewable energy, sea freight (outside the Strait of Hormuz). They lose: sectors sensitive to changes in energy prices (aviation, automotive, services); industrial and petrochemical sectors in Asia; logistics, tourism and luxury goods; semiconductors and AI-enabled equipment (Qatar accounts for a third of global supplies of helium, which is crucial for cooling integrated circuits).
