According to Michael Haigh, Ben Hoff, and Jeremy Sellem of Societe Generale's Commodity Compass Analytics (CCA) team, Dated Brent at $141/bbl indicates extreme physical tightness as Strait of Hormuz movements continue to be hampered. With Brent prices ranging from about $125/bbl to possibly beyond $200/bbl and only a gradual normalization of inventories until late 2026, their scenario study maps outcomes from controlled escalation to protracted conflict and chokepoint closures.
Price trends and scenarios for oil shocks
"We look at three new possibilities in this week's CCA. The first (A) examines the effects of charging tolls to ships passing through the Strait of Hormuz, including the cost of doing so and the possible consequences for future hostilities. Based on our estimations, this suggests an average price of nearly $520,000 per vessel, or about $0.26/bbl, spread over about 21,900 tanker transits."
"The second scenario (B) concentrates on the conflict itself, assuming that it lasts through April and May and that it escalates under control before being resolved somewhat quickly. In this scenario, both price increases and policy-driven changes in consumption cause demand destruction to accelerate and oil prices to climb even more. Countries would prioritize supply security over price and provide continuous price support as conditions gradually returned to normal, not just rebuilding stocks to pre-war levels but also increasing stockpiling beyond that. In this case, April prices average $125 per barrel.
Instead of a controlled escalation, the disagreement gets more intense in the third scenario (C). This may entail American troops on the ground and probably start a larger regional confrontation that would involve Iran's proxies more directly. In this scenario, we assume that the disruption to the oil market intensifies, possibly leading to a temporary closure of the Bab el-Mandeb.
"Prices would increase significantly under these circumstances, averaging $150 per barrel and maybe surpassing $200 per barrel. Precautionary and strategic hoarding would somewhat counteract the acceleration of demand destruction in reaction to increased prices, improving the medium-term pricing picture despite lower consumption.
Price trends and scenarios for oil shocks
"We look at three new possibilities in this week's CCA. The first (A) examines the effects of charging tolls to ships passing through the Strait of Hormuz, including the cost of doing so and the possible consequences for future hostilities. Based on our estimations, this suggests an average price of nearly $520,000 per vessel, or about $0.26/bbl, spread over about 21,900 tanker transits."
"The second scenario (B) concentrates on the conflict itself, assuming that it lasts through April and May and that it escalates under control before being resolved somewhat quickly. In this scenario, both price increases and policy-driven changes in consumption cause demand destruction to accelerate and oil prices to climb even more. Countries would prioritize supply security over price and provide continuous price support as conditions gradually returned to normal, not just rebuilding stocks to pre-war levels but also increasing stockpiling beyond that. In this case, April prices average $125 per barrel.
Instead of a controlled escalation, the disagreement gets more intense in the third scenario (C). This may entail American troops on the ground and probably start a larger regional confrontation that would involve Iran's proxies more directly. In this scenario, we assume that the disruption to the oil market intensifies, possibly leading to a temporary closure of the Bab el-Mandeb.
"Prices would increase significantly under these circumstances, averaging $150 per barrel and maybe surpassing $200 per barrel. Precautionary and strategic hoarding would somewhat counteract the acceleration of demand destruction in reaction to increased prices, improving the medium-term pricing picture despite lower consumption.
