Brent crude prices could approach US$200 per barrel by the end of 2026 if disruption in the Strait of Hormuz continues and no settlement between the United States and Iran is reached by September, according to a May 20 Wood Mackenzie report.
The report warned that a prolonged closure of the Strait could trigger the largest global energy supply shock in decades, with more than 11 million barrels per day of Gulf crude and condensate production already affected and about 20% of global liquefied natural gas (LNG) supply cut off from markets.
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“The Strait of Hormuz is the most critical chokepoint in global energy markets, and a prolonged closure would become far more than an energy crisis… The longer disruption persists, the greater the impact on energy prices, industrial activity, trade flows and global economic growth,” said Peter Martin, Head of Economics at Wood Mackenzie.
Wood Mackenzie outlined three possible outcomes, “Quick Peace,” “Summer Settlement,” and “Extended Disruption,” each tied to different timelines for reopening the Strait and restoring energy flows.
The report described the “Quick Peace” scenario as the most optimistic, where a near-term peace deal leads to the reopening of the Strait by June and a return of the global economy to its pre-war trajectory by the fourth quarter of 2026. The scenario specifically predicts the per-barrel Brent crude price falling sharply to US$80 by the end of 2026 and US$65 in 2027.
Under the “Summer Settlement” scenario, the consultancy said negotiations continue through late summer, with the Strait remaining mostly closed until September. Oil and LNG shortages would persist through the third quarter of 2026, pushing global economic growth below 2% and triggering a shallow recession in the second half of the year.
The most severe outlook, however, comes under the “Extended Disruption” scenario, where tensions continue through the end of 2026, and supply disruptions remain in place.
“Brent crude prices could approach US$200/bbl by end-2026, despite global oil demand falling by 6 million b/d year-on-year in H2 (second half) 2026… More than 11 million b/d of crude and condensate production remains shut in, and global oil inventories continue to decline. Diesel and jet fuel prices could rise towards US$300/bbl in major refining centres by year end,” the report said.
About one-fifth of the world’s oil supply passes through the waterway, along with major volumes of LNG. Tensions involving Iran have increased the risk of disruption, affecting tanker movements and raising shipping costs.
In Guyana, rising fuel prices have already contributed to increases in transportation fares by some operators, creating tension with the government over rate hikes and adding pressure on commuters.
