Author: admin

Tensions in Iran threaten global energy security through the risk of disruption in the Strait of Hormuz, the world’s most important energy trade route. Around a fifth of global oil and LNG transits the Strait each day, worth over $1.3 billion including Iranian exports themselves.

In this report, we explain our baseline and explore three upside/downside scenarios:

• Our baseline (45% probability) is unchanged: we assume the Strait remains open and energy flows are not meaningfully disrupted. However, recent events have increased the upside risk to oil and gas prices.
• Scenario 2: ongoing low-level disruption to the Strait (30% probability). The Strait remains open for some transit, but repeated interference disrupts shipping for several weeks, reducing traffic and raising costs. This scenario is likely to involve US strikes on Iran. In this scenario, Brent averages $79 per barrel over Q2, $13 above our baseline.
• Scenario 3: tail-risk upside — severe disruption (5% probability). We assume disruption is extreme but short-lived. Iran effectively halts transit through the Strait for up to a week, causing a sharp global price spike. In this scenario, we expect Brent to average $85 per barrel over Q2, $19 above our baseline.
• Scenario 4: downside risk — rapid de-escalation and sanction relief (20% probability). We assume nuclear talks deliver a breakthrough before Trump’s 10–15-day window expires. Iran agrees to a JCPOA-style deal, a US strike is avoided, and tensions around the Strait de-escalate quickly. In this scenario, oil prices quickly recover back to their fundamental level around $63 per barrel, and fall further through the year.

Download our report to learn more.