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Brent Could Hit $200 as Hormuz Closure Triggers Third Global Recession, Wood Mackenzie Warns
Wood Mackenzie predicts Brent crude prices could surge to $200 per barrel due to a prolonged closure of the Strait of Hormuz. This disruption would halt nearly one-fifth of global LNG supplies, triggering a third global recession this century.
Strait of Hormuz Closure: A Critical Threat
A prolonged closure of the Strait of Hormuz could unleash the biggest global energy shock in decades, driving Brent crude prices close to $200 per barrel, disrupting nearly one-fifth of global LNG supplies, and triggering the world's third recession this century. This warning comes from Wood Mackenzie.
The report highlights that Gulf crude and condensate production, exceeding 11 million barrels per day (bpd), and over 80 million tonnes per annum (mtpa) of LNG supply—equivalent to approximately 20% of global LNG trade—remain exposed to severe disruption if tensions around the Iran conflict escalate further.
Peter Martin, Head of Economics at Wood Mackenzie, characterizes the Strait of Hormuz as the most critical choke point in global energy markets. He states that a prolonged closure would become far more than an energy crisis.
Three Potential Scenarios for Oil Prices
Wood Mackenzie outlined three scenarios: a quick peace, summer settlement, and an extended disruption. Each scenario carries significantly different implications for crude prices, LNG supply, and economic growth.
Under the most optimistic scenario, "quick peace," the Strait reopens by June following a workable peace agreement, allowing energy markets to stabilize gradually. In this case, Brent crude prices could ease to around $80 per barrel by end-2026 and further decline to nearly $65 per barrel in 2027 as oil markets return to oversupply conditions. Global GDP growth slows from 3% in 2025 to 2.3% in 2026, with recessionary pressures largely confined to West Asia before the world economy returns to its pre-war trajectory by late 2026.
The "summer settlement" scenario assumes ceasefire negotiations extend into late summer, keeping the Strait largely closed until September. Under this scenario, oil and LNG shortages would persist through the third quarter of 2026, driving a shallow global recession during the second half of the year. Global GDP growth falls below 2% in 2026, leaving lasting economic damage compared with pre-war projections.
Extended Disruption: A $200 Brent Forecast
The most severe "extended disruption" scenario assumes the Strait remains largely closed through the end of 2026 amid recurring military tensions and repeated supply disruptions. Under this scenario, Brent crude prices could approach $200 per barrel by end-2026 despite global oil demand falling by nearly 6 million bpd year-on-year during the second half of the year due to severe demand destruction from soaring fuel costs.
In this optimistic scenario, LNG markets remain tight through summer 2027 because Gulf export infrastructure may recover only gradually and project delays slow the next phase of LNG supply additions. Diesel and jet fuel prices could surge towards $300 per barrel in major refining hubs while global oil inventories continue to decline sharply.
The report warned that the global economy could contract by as much as 0.4% in 2026, triggering the third global recession this century.
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