International oil prices are heading toward the "100 mark." How will the subsequent trend and impact develop? Read to understand.

Cailian Press, March 7 (Editor: Huang Junzhi) The conflict between the U.S. and Iran has been ongoing for nearly a week, and the “world’s most critical oil choke point” — the Strait of Hormuz — is almost at a standstill, significantly impacting oil production in the Middle East. Against this backdrop, international oil prices surged this week, with U.S. and Brent crude oil experiencing their largest weekly gains since records began in 1983 and 1991, respectively.

As panic sentiments continue to grow, the international benchmark Brent crude rose over 8% on Friday, and WTI futures for April increased by more than 12%, both breaking through $90 per barrel. Investors are increasingly worried that sustained high oil prices could have severe economic consequences. They are comparing the current situation to the oil shocks of the 1970s, when soaring oil prices led to stagflation.

Vikas Devedi, Global Energy Strategist at Macquarie, said, “We are increasingly confident that if no agreement is reached and all military actions are not quickly halted, the oil market could start to collapse within days, not weeks or months.”

“Based on our analysis, a blockade of the Strait of Hormuz for several weeks could trigger a series of chain reactions, potentially pushing oil prices up to $150 per barrel or higher,” he added.

However, Wall Street’s expectations that oil prices will exceed $100 per barrel are not entirely uniform. Goldman Sachs analysts have set a target price of $76 per barrel for Q2, while also acknowledging that oil prices could remain around $80 per barrel before March.

“Nevertheless, our risk to oil price forecasts is clearly skewed to the upside. The key variable is the duration: how long will the Strait of Hormuz and most of the oil and refined products in the Persian Gulf be blocked?” Daan Struyven, Head of Oil Research at Goldman Sachs, said in an interview.

Here are some key points and their potential impacts according to Wall Street: $80–90 per barrel First, oil prices may have already reached a level that could trigger more serious economic consequences.

Nic Puckrin, Chief Market Analyst at Coin Bureau, wrote in a report this week that if oil prices “significantly” break through $80 and stay there for several weeks, it could start to boost inflation prospects.

“If oil prices rise above $90 and remain high as energy infrastructure disruptions intensify, this could quickly evolve into a long-term structural shift,” he stated.

$100 per barrel José Torres, Senior Economist at Interactive Brokers, said that reaching $100 per barrel would mark a true oil shock. He added that if prices hit that level, markets might react with inflation similar to what happened after the Russia-Ukraine conflict erupted. He referred to the U.S. consumer price index rising by as much as 9% year-over-year, along with rising energy prices.

In this scenario, Torres expects inflation to rebound to around 3%. He also mentioned that the prospects for Fed rate cuts would be hindered, increasing the risk of stagflation.

“That’s the risk. So we might experience a year of (stock market) decline,” he added.

Michael Wilson, Chief Investment Officer at Morgan Stanley and a staunch bull on Wall Street stocks, also said that “a $100 per barrel oil price could overturn his bullish outlook on stocks.” He pointed out that this is mainly due to oil’s impact on economic growth, citing his team’s analysis of historical stock market performance following oil price surges.

The bank stated in a client report this week that if oil reaches $100, the year-over-year increase could be 75%–100%, and historically, this range often leads to poor stock market performance.

Wilson added, “Given the recent events in Iran and the Middle East, the worst-case scenario for stocks is: a sharp rise or sustained increase in oil prices, which would threaten the sustainability of the economic cycle.”

$120 per barrel Bruce Richards, CEO of Marathon Asset Management, an American hedge fund, said that “oil reaching $120 per barrel could trigger a recession in the U.S.” He emphasized that rising oil prices could create a stagflation environment.

“When Brent crude hits $120, economic growth would be zero. That’s the trigger for a recession. That’s what I believe, and I think the market believes it too, although no one has publicly admitted it yet,” he added.

Nobel laureate Paul Krugman also predicted that if oil prices rise to $120 per barrel, it would have significant negative effects. He stated that “such a surge in oil prices could increase overall inflation by about 1 percentage point and exacerbate recession risks.”

Krugman noted that he does not believe oil price fluctuations alone would trigger a recession or runaway inflation, but he sees the risks more tilted downward. He also pointed out that the U.S. economy is already under pressure from other factors, such as a weak labor market.