Will the Resumption of War in Iran Push Brent Crude Oil Past $80 Again?

On February 28, the United States and Israel launched a large-scale joint military strike against Iran, causing Middle East risks to escalate sharply. The market’s initial reaction is usually to chase risk premiums, but what truly determines the direction of oil prices is not sentiment, but whether the supply chain is substantively damaged.

According to Wind Trading Desk, HSBC’s senior global oil and gas analyst Kim Fustier’s core judgment in a recent study is: Iran-related risks to the oil market are “asymmetric,” with upside potential significantly greater than downside risk; among them, the security of transportation through the Strait of Hormuz is the biggest variable. If there is even a brief interruption, Brent oil prices could rapidly surge toward $80/barrel.

However, outside all scenarios, HSBC maintains its long-term assumption of Brent at $65/barrel in 2026. The reason is simple: there remains a global liquid supply surplus of about 2.3 million barrels per day, OPEC+ has considerable spare capacity, and while geopolitical risks may push prices higher, they are unlikely to change the medium-term supply-demand framework.

The key question is, which path will the conflict take? Will oil prices experience a “spike,” or will it evolve into a structural revaluation?

The true core risk is not Iran’s oil fields, but the Strait of Hormuz

Iran’s current liquid output is about 4.6 million barrels per day, of which crude oil accounts for about 3.3 million barrels per day, with exports previously at 1.6–1.8 million barrels per day, almost all flowing to East Asia. If military action is limited to airstrikes on nuclear facilities or military targets without touching energy infrastructure, Iranian crude oil supply itself may not immediately decline sharply.

The real leverage lies at the transportation end.

About 19–20 million barrels of liquid fuels pass through the Strait of Hormuz daily, accounting for about 19% of global supply. Of this, roughly 15 million barrels are crude oil, with the rest being refined products and LPG. Even if a blockade is hard to maintain for long, a brief interruption is enough to trigger a sharp jump in prices.

Alternative routes are limited. Saudi Arabia’s east-west pipeline has a total capacity of about 7 million barrels per day, but idle capacity is only 2–4 million barrels; the UAE pipeline to Fujairah has idle capacity of about 400,000–500,000 barrels. The total alternative capacities are far from sufficient to cover the volume transported through the strait.

This means that if Iran chooses to retaliate towards the strait, the reaction in oil prices will far exceed that of a simple Iranian production cut.

OPEC’s “spare capacity” is unavailable in a blockade scenario

Currently, OPEC countries in the Middle East Gulf have a combined spare capacity of about 4.6 million barrels per day: Saudi Arabia 2.1 million barrels, UAE 1.2 million barrels, Iraq 480,000 barrels, Kuwait 360,000 barrels, Iran about 500,000 barrels.

But this capacity is highly dependent on exports through the Strait of Hormuz.

If the strait is blocked, the market’s theoretical “safety cushion” will fail physically. The global oil market has become reliant on Middle Eastern spare capacity in recent years, but once transportation is restricted, the buffer mechanism will suddenly fail.

This is also the logical basis for what HSBC calls “asymmetric risk”—the tail risk of supply interruption is much greater than the price drop space after an agreement is reached.

Different escalation paths correspond to different oil price amplitudes

Among the scenarios listed by HSBC, price elasticity moves up in steps:

• Limited strike, no retaliation: Oil prices jump $5–10 in the short term, then fall back, similar to the event in June 2025.

• Wider military escalation: Iran’s output may drop to the 2.8–2.6 million barrels per day range, with oil prices surging $10–15.

• Internal turmoil combined with conflict: Output drops to 2.2 million barrels per day, supply shock expands to the entire Gulf, and price increases may exceed $15.

Historical cases are not uncommon. The 1979 Iranian Revolution, the two Gulf Wars, and the Libyan Civil War all caused years-long losses in output. What truly changes the oil price cycle has never been just air strikes, but the destabilization of regimes and social order.

There is currently no sign that Iran’s energy infrastructure has suffered systematic damage. If the conflict is contained to military targets, the market is more likely to replicate the “jump up—fall back” path.

The risk to refined products is underestimated

The market’s focus is on crude oil, but about 10% of the world’s diesel and 20% of jet fuel depend on strait transportation.

Europe and the United States are currently in the post-refinery maintenance recovery phase, making refined product supply already tight. If transportation interruptions last longer, the jet fuel market may first experience regional shortages.

Price signals may first appear in crack spreads, rather than in Brent itself.

The medium-term framework is still “geopolitical premium amid surplus”

HSBC’s latest estimates show that the global liquid supply surplus in 2026 will still be around 2.3 million barrels per day (previously 2.6 million barrels). Even considering geopolitical risks, this structure has not reversed.

OPEC+ will resume its production increase rhythm after the March 1 meeting. HSBC expects the quota to increase by 137,000 barrels per day in April, with monthly increases rising to about 280,000 barrels per day from May to July. The group’s primary goal is to regain market share, not to further tighten supply.

As long as Brent remains above $70/barrel, OPEC+ is highly unlikely to proactively cut production in 2026.

This means that as long as there is no sustained blockade of the Strait of Hormuz, the oil price center is unlikely to deviate far from the long-term assumption of $65/barrel.