Markets ‘completely wrong’ on Iran war, oil could hit $200 a barrel: Economist

Key Points

• Economist John Sfakianakis warns that markets are 'completely wrong' in pricing out the risk of an escalating Iran war, citing military buildup and stalled negotiations.
• He states the oil market is now in a 'new paradigm' where the risk premium for the Strait of Hormuz must be factored into pricing, which could push crude to around $200 per barrel if the conflict persists.
• Analysts across multiple outlets echo this view, flagging a high probability that prolonged disruption of Hormuz shipping would drive prices toward the $200-per-barrel level.
• Saudi Arabia's crude oil loadings at its Yanbu port on the Red Sea are set to surge to a record 3.8 million barrels per day in March, as exports via the Strait of Hormuz are effectively shut.

Full Details

John Sfakianakis of the Gulf Research Center asserts that global markets are severely underestimating the risk of an escalating Iran conflict, pointing to increased military activity and failed negotiations as clear escalation signals. He argues the oil market has entered a 'new paradigm' where the strategic risk premium of the Strait of Hormuz—vital for 20% of global oil trade—must be permanently priced in, potentially pushing Brent crude to $200 per barrel. This aligns with warnings from Macquire Group, which projects that three more months of war could cause oil prices to skyrocket, translating to about $7 per gallon at U.S. pumps. In response, Saudi Arabia is already record-loading crude via the Red Sea, with March shipments at Yanbu port set to hit 3.8 million barrels per day. TC Energy's CEO sees an opportunity for Canada to fill supply gaps, but notes capacity constraints. As one analyst summarized, 'This isn't a blip—it's a fundamental reprice of global energy risk.'