Iran Conflict Reignites: Will Brent Crude Oil Price Surge Toward $80 Again?

On February 28, the US and Israel launched a large-scale joint military strike against Iran, sharply escalating risks in the Middle East. The market's first 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 actually damaged.

According to ZuiFeng Trading Desk, Kim Fustier, Senior Global Oil & Gas Analyst at HSBC, stated in a recent research report that risks related to Iran pose an “asymmetric” threat to the oil market, with upside potential significantly exceeding downside risk. Among these risks, the safety of shipping through the Strait of Hormuz represents the greatest variable; even a brief disruption could rapidly push Brent crude oil prices toward USD 80 per barrel.

However, outside all scenarios, HSBC maintains its long-term assumption of $65 per barrel for Brent crude in 2026. The reason is straightforward: there remains a global liquid supply surplus of approximately 2.3 million barrels per day, OPEC+ holds substantial spare capacity, and while geopolitical risks push prices higher, they are unlikely to alter the medium-term supply-demand framework.

The question is, which path will the conflict take? Will oil prices experience a "pulse-like surge," or will they evolve into a structural reassessment?

The real core of the risk lies not in Iran's oil fields, but in the Strait of Hormuz.

Iran’s current liquids production is approximately 4.6 million barrels per day, of which crude oil accounts for about 3.3 million barrels per day. Its exports previously ranged between 1.6–1.8 million barrels per day, almost entirely destined for East Asia. If military action is limited to airstrikes on nuclear facilities or military targets without affecting energy infrastructure, Iran’s crude oil supply itself may not immediately decline significantly.

The real leverage is in the transportation end.

The Strait of Hormuz sees about 19 to 20 million barrels of liquid fuels pass through daily, accounting for about 19% of global supply. Of this, about 15 million barrels are crude oil, with the remainder being refined products and LPG. Even if a blockade cannot be sustained for a long time, a short-term disruption would be enough to cause a sharp spike in prices.

Alternative routes are limited. The total capacity of Saudi Arabia's east-west pipelines is about 7 million barrels per day, but the idle capacity is only 2-4 million barrels. The pipeline from the UAE to Fujairah has an idle capacity of about 400,000-500,000 barrels. The total alternative capacity is far insufficient to cover the Strait's transportation volume.

This meansIf Iran chooses to retaliate in the Strait direction, the oil price reaction would far exceed that caused by Iran's production cuts alone.。

OPEC's "spare capacity" is not available in a blockade scenario.

Currently, the OPEC countries in the Middle East Gulf collectively hold approximately 4.6 million barrels per day of idle capacity.Saudi Arabia: 2.1 million barrels, UAE: 1.2 million barrels, Iraq: 480,000 barrels, Kuwait: 360,000 barrels, Iran: approximately 500,000 barrels.

But these production capacities are highly dependent on the Hormuz export.

If the strait is blocked, the market’s theoretical “safety cushion” would physically fail. In recent years, the global oil market has become reliant on spare Middle Eastern production capacity, and any disruption to shipping would cause this buffer mechanism to suddenly break down.

This is also the logical basis for HSBC’s statement of “asymmetric risk”—the tail risk of supply disruption is significantly greater than the potential price decline following an agreement.

Different upgrade paths correspond to different oil price ranges.

Among the scenarios outlined by HSBC, price elasticity shifts upward in a stepwise manner.

• Limited strike, no retaliationOil prices surged 5–10 dollars in the short term and then retreated, similar to the event in June 2025.

• Broader military escalationIran's production may fall to the range of 2.8-2.6 million barrels per day, pushing oil prices up by $10-15.

• Internal turmoil compounded by conflictOutput dropped to 2.2 million barrels per day, and the supply shock expanded across the Gulf, with price increases potentially exceeding $15.

Historical precedents are not uncommon. The 1979 Iranian Revolution, the two Gulf Wars, and the Libyan civil war all caused production losses lasting several years. What truly shifts oil price cycles has never been airstrikes, but rather the collapse of regimes and social order.

There are currently no signs of systemic damage to Iran’s energy infrastructure. If the conflict remains confined to military targets, the market is more likely to follow a “surge–recoil” pattern.

Refined oil risks are underestimated.

Market attention is focused on crude oil, but about 10% of global diesel and 20% of aviation fuel depend on strait transportation.

Europe and the U.S. are currently in the recovery phase following the refinery maintenance season, and the supply of refined oil products is already tight. If the transportation disruption prolongs, the aviation fuel market may be the first to experience regional shortages.

Price signals may first be reflected in the crack spread rather than in Brent itself.

The medium-term framework remains “geopolitical premium amid oversupply.”

HSBC’s latest calculation shows a global liquid supply-demand surplus of approximately 2.3 million barrels per day in 2026 (previously 2.6 million barrels), and even accounting for geopolitical risks, this structural surplus has not reversed.

OPEC+ will resume its production increase pace following its meeting on March 1. HSBC expects the April quota to rise by 137,000 barrels per day, with monthly increases from May to July rising to approximately 280,000 barrels per day. The group's current primary objective is to regain market share rather than further tighten supply.

The likelihood of OPEC+ voluntarily cutting production in 2026 is extremely low if Brent crude remains above $70 per barrel.

This means that as long as Hormuz is not continuously blockaded, the oil price level is unlikely to deviate far from the long-term assumption of 65 USD per barrel.