Oil prices surged on Friday, with Wall Street analysts warning that the commodity could climb well beyond the 7% spike seen that day, potentially reaching over $90 a barrel if the conflict between Israel and Iran escalates further.
At the close of trading on Friday, West Texas Intermediate futures (CL=F) and international benchmark Brent crude (BZ=F) were trading around $74 a barrel, after experiencing a spike of more than 13%. Goldman Sachs analysts estimated that the conflict could disrupt 1.75 million barrels per day of Iranian supply over six months, although this could be partially offset by increased output from other OPEC+ producers.
“We estimate that Brent could reach a peak just over $90/bbl, but decline back to the $60s in 2026 as Iran’s supply recovers,” wrote Goldman’s Daan Struyven and his team in a note published on Friday morning. However, the potential for further escalation in the conflict could see prices rise even higher.
According to Goldman Sachs, a broader conflict involving regional producers or a closure of the Strait of Hormuz, through which roughly 20% of global oil flows, could push prices up by approximately 35% from current levels. In an extreme scenario of extended disruption, oil prices could exceed $100/bbl.
Before the Israeli strikes, JPMorgan analysts had forecast that Brent could spike as high as $120 in a worst-case scenario. Despite the potential for prices to rise significantly, both firms see the upside as likely short-lived.
“Our comfort zone remains with oil prices in the $60-65 range, as sustained gains could severely impact inflation, reversing months of cooling in U.S. consumer prices,” noted JPMorgan’s Natasha Kaneva.
However, the risk of demand destruction remains a key limiting factor. “The issue is that the consumer can’t really afford that level of pricing. And so demand would come down significantly,” explained Hedgeye Risk Management energy analyst Fernando Valle. “Typically, it does not take long after these initial skirmishes before it reverses.”
In response to the escalating tensions, Iran described the Israeli strikes as a “declaration of war” in a letter to the UN. Tehran also launched a drone attack on Israel, which some see as a precursor to a more severe missile onslaught. President Trump urged Iran to “make a deal” over its nuclear program to avoid further conflict.
As the situation continues to unfold, the oil market remains volatile, with the potential for prices to climb even higher if the conflict intensifies. Investors and analysts will be closely monitoring developments to gauge the impact on global oil supply and prices in the coming months.
