Energy markets are in a period of high uncertainty amid disruptions to oil and gas flows through the Persian Gulf. New research from ING evaluated pathways for duration and severity of the current supply shock.

The bank's commodities team warns that the complex risk around the Strait of Hormuz — a critical chokepoint for global energy trade — means markets must now prepare for a longer period of constrained supply and elevated prices.

"There are few signs of de-escalation or a resumption in energy flows from the Persian Gulf," said Warren Patterson, Head of Commodities Strategy at ING. "The market is having to reprice the duration of ongoing supply disruptions."

And, if the conflict drags on and attacks keep choking Hormuz shipments, oil prices could surpass 2008 highs and spike to new record levels, according to the Dutch bank.

Inefficient Spare Capacity

The disruption is already significant. Around 8 million barrels per day of crude production have been shut in so far, while up to 15 million barrels per day of oil flows remain affected even after accounting for pipeline routes that bypass the Strait of Hormuz.

ING argues that the scale of the disruption makes it difficult for alternative supply sources to fill the gap quickly. Since much of OPEC’s spare capacity is located in the same affected Gulf region, potential relief is limited. Meanwhile, emergency releases from strategic reserves help only in the short term, and increases in U.S. output would be too little too late.

"Additional supply from the U.S. would likely take at least six months to come online, and the volumes will only be a fraction of the losses we are currently seeing," Patterson said.

Three Scenarios

ING outlined three potential scenarios for how the crisis could evolve.

In the base scenario, energy flows through Hormuz remain largely disrupted until the end of March. Then, a gradual easing of hostilities and renewed diplomatic engagement would slowly resume the shipments during Q2. Upstream production and refining operations would ramp up over time.

Under this scenario, markets remain tight well into the summer, keeping Brent crude prices elevated around the $100 per barrel range as supply chains recover only gradually.

Price Watch: United States Oil Fund (NYSE:USO) is up 64.70% year-to-date.

In a more optimistic scenario, conflict would de-escalate faster. In this case, disruptions would still persist through March, but improving security conditions would start recovering the flows by April and reach close to normal levels by May.

With shipments stabilizing more quickly, oil prices would likely moderate toward roughly $90 per barrel as the risk premium gradually fades.

ING also outlines a more aggressive downside scenario. In this case, hostilities continue through April, and then face a prolonged period of lower-level confrontation. Continued attacks on vessels navigating through Hormuz would keep the flows constrained through May and delay any meaningful recovery until the summer months.

If that occurred, Patterson warned that prices could surge dramatically.

"Oil prices would spike to record highs under this scenario," he said, noting that elevated prices would likely be required to curb demand and rebalance the market. The current all-time high of WTI oil is around $147.27 per barrel.

Natural gas markets could face even greater pressure. The disruption affects roughly 20% of global LNG trade, leaving limited options to replace lost supply and increasing the likelihood that demand destruction will play a key role in restoring balance.

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