Energy markets are now “clearly in the crosshairs” of the Iran conflict, according to RBC Capital Markets, which warns of oil prices into the $100s per barrel if fighting and disruption persists.
In a new commodities note on Iran flashpoints, the bank says the Strait of Hormuz is effectively closed after vessel attacks and the withdrawal of war risk insurance. Tanker traffic reportedly collapsed from 56 ships on Friday to just seven tankers and one gas carrier on Sunday.
RBC cautions that while Iran may not formally shut the Strait, it can use small boats, mines, drones and missiles to deter shipping until hostilities end. Most major insurers are expected to terminate war risk cover from March 5.
In a prolonged conflict, the bank sees oil prices moving into the $100s per barrel. Global gas prices could revisit levels last seen in early 2023, in the aftermath of Russia’s invasion of Ukraine.
It argues European gas benchmarks such as TTF better reflect current risk than oil, which it views as a lagging indicator of potential supply shocks.
The risks are not theoretical. Saudi Arabia’s Ras Tanura refinery, with capacity of 550,000 barrels per day, has halted processing after debris from intercepted Iranian drones damaged storage infrastructure. The adjacent export terminal shipped about 5.4 million barrels per day last year.
RBC cautions that alternative pipeline routes, such as Saudi Arabia’s 7 million barrel a day East-West line and the UAE’s 1.5 million barrel a day ADCOP pipeline, could offset only part of the disruption – and remain vulnerable to attack themselves.
Iraq is seen as particularly exposed, with limited export alternatives and storage capacity, meaning it could be forced to curb output if its 3.5 million barrels a day of southern exports cannot move through Hormuz for an extended period.
Also flagged were renewed risks to Russian supply after fresh Ukrainian strikes on the Novorossiysk port, reportedly hitting six of seven loading facilities at the Sheskharis terminal, underscoring how multiple flashpoints could tighten global balances simultaneously.
Gold has gained modestly as a safe haven, but the bank says energy markets are currently absorbing more of the geopolitical shock.
US natural gas remains relatively insulated given export capacity is already about 96% utilised, limiting sustained price spikes.