Geopolitical Risk, Inflation, Scarcity – All Roads Lead To $200 Oil

Oil Prices Surge as War Premium Returns

Brent Crude has climbed more than 25% in the past month alone, soaring to $81.40 a barrel on the Monday open as geopolitical tensions escalate dramatically across the Middle East. The immediate catalyst: U.S military strikes on Iranian nuclear facilities, launched in response to a growing confrontation between Israel and Iran.

This escalation has turned a regional flashpoint into a global Energy event. As Phil Carr, Head of Trading at GSC Commodity Intelligence, puts it: “traders are no longer asking if Oil will surge – they’re asking how high and how fast. And with the world’s most critical Energy corridor now at risk, the case for $200 Oil is rapidly gaining traction”.

The Last Time War Premium and Supply Shocks Collided – Oil Rocketed 150%

Looking at recent history, the warning signs are impossible to ignore. Every time the United States has become militarily entangled in an Oil-producing region, Crude prices have responded with sharp, sustained rallies. During the Iraq War’s peak escalation between 2007 and 2008, Oil prices more than doubled, climbing from $59 a barrel to over $146 a barrel – notching up a phenomenal gain of almost 150% in just 18 months.

In 2011, the NATO-led intervention in Libya sparked a similar surge. With 1.6 million barrels per day suddenly wiped from the global supply, Oil skyrocketed from $91 to $133 within three months.

Today, the same dynamics are at play. But this time, global inventories are lower, spare capacity is tighter and central banks are still grappling with post-pandemic inflation. In other words, the fuse has been lit – and Oil’s next move could be one of the most explosive in history.

The Triple Threat that Could Send Crude Prices Vertical

The current Oil rally isn’t being driven by a single factor. Analysts at GSC Commodity Intelligence say “it’s the result of a triple threat: geopolitical instability, resurgent inflation and supply scarcity”.

As war spreads in the Middle East, Oil-exporting nations face mounting threats to their infrastructure and output. Meanwhile, Energy costs are beginning to ripple across the broader economy – reigniting inflation just as central banks were preparing to ease policy.

At the same time, supply remains structurally constrained. Years of underinvestment in exploration and production have left the market fragile. The global oil system is operating with little margin for error – and that margin is quickly vanishing.

Strait of Hormuz Closure Could Be a $200 Catalyst

Nowhere is the market’s vulnerability more evident than in the Strait of Hormuz – the world’s most important Oil chokepoint. Nearly 25% of global Oil and 20% of LNG passes through this narrow corridor. Iran has repeatedly threatened to shut it down if provoked. That threat has now escalated to near-term reality.

On Sunday, Iranian lawmakers publicly supported closing the Strait. While the final decision lies with the National Security Council, major investment banks are already strategizing the impact. Goldman Sachs now places a 57% probability on a partial or full closure in 2025 – a move that could send Oil above $150 a barrel in a matter of days, with $200 no longer considered extreme.

Trump’s Rhetoric Signals Prolonged Instability

President Donald Trump has poured further fuel on the fire, hinting at regime change in Iran following this weekend’s strikes. On his social media platform, he wrote, “If the current Iranian regime can’t MAKE IRAN GREAT AGAIN… then maybe it’s time for a change”. The implications are clear: Washington may be preparing for a long campaign of economic and military pressure, which could keep Oil markets elevated for months to come.

The $200 Oil Era May Be Closer Than Anyone Thinks

The convergence of war, inflation and supply insecurity has created the most bullish setup for Oil in over a generation. While $200 a barrel may have once seemed extreme, it is now increasingly viewed as a base-case scenario in the event of further conflict. According to GSC Commodity Intelligence – “This is no longer a short-term spike – it’s the beginning of a structural revaluation of Crude Oil prices. For traders, the question is no longer if Oil will climb, but how high it will go from here”.