Bank of America Sounds Alarm as Iran War Threatens Oil Surge Beyond $150

Bank of America has warned that oil prices could climb beyond $150 a barrel if the ongoing war in Iran continues to squeeze global inventories. The warning, reported Tuesday by MarketWatch, presents a severe price scenario as disruption and geopolitical tension weigh on the outlook for supplies.

The bank also raised its forecast for Brent crude at the end of the year. Its revised outlook now calls for $95 a barrel, up from the previous estimate of $83 a barrel, according to MarketWatch.

That $12 revision is substantial, but it remains far below the level identified in the bank’s warning about a prolonged conflict. The possibility of oil moving beyond $150 a barrel depends on the war continuing to strain inventories, as described in the report.

A team of Bank of America strategists published the note Tuesday. The group was led by Francisco Blanch, who serves as head of global commodities, equity derivatives and cross-asset quantitative investment strategies.

The strategists said efforts to limit the supply shortfall have provided some relief, but they cautioned that conditions remain difficult. “Although alternative routes and escorted Hormuz shipments have mitigated some of the shortfall, damaged infrastructure and rising geopolitical tensions make rapid normalization unlikely,” the team wrote, according to MarketWatch.

The statement identifies alternative routes and escorted Hormuz shipments as measures that have reduced part of the shortfall. At the same time, the team pointed directly to damaged infrastructure and rising geopolitical tensions as obstacles to a rapid return to normal conditions.

Oil prices were also reported to be close to $100 a barrel, with no indication of a resolution in the Middle East. That backdrop has fueled speculation about whether the Trump administration could consider restricting fuel exports in an attempt to push domestic fuel prices lower.

President Trump said Tuesday that he would support banning exports of diesel fuel amid calls from Republicans ahead of the midterm elections. The statement came as fuel costs and the continuing conflict remained prominent concerns in the market coverage.

A separate report said record diesel prices were hitting the West Coast hardest. The combination of elevated oil prices, diesel pressure and the possibility of export restrictions added another layer to the market concerns surrounding the Iran conflict.

Financial markets showed mixed reactions as oil prices moved. One update said the Dow, S&P 500 and Nasdaq drifted higher while oil prices continued to retreat, while another said the major indexes wavered as oil prices and bond yields rose.

Other market updates said stocks rebounded after the Federal Reserve raised interest rates and oil prices eased. The Federal Reserve increased rates for the first time in three years, while President Trump criticized the decision and said United States interest rates should be 1% or less.

The reported federal funds rate rose to a range of 3.75% to 4%. Following the Federal Reserve’s decision, another market update said the Dow dropped 600 points as bond yields surged.

Against that wider market volatility, Bank of America’s oil warning stands out for the scale of the potential increase. A move beyond $150 a barrel would be more than $50 above the level near $100 cited in the source coverage.

The bank’s revised Brent forecast also signals that its expectations have already moved higher even without the extreme scenario materializing. The new $95 outlook exceeds the former $83 estimate while remaining well below the possible level associated with continued inventory strain.

For now, the strategists’ assessment centers on the durability of the disruption described in their note. Alternative routes and escorted shipments have softened some of the shortfall, but damaged infrastructure and geopolitical tensions have left Bank of America warning that normalization is unlikely to happen rapidly.