The situation in the Middle East has suddenly escalated, posing the greatest uncertainty to the global energy market in decades. According to the news from the Wind Trading Desk, Deutsche Bank outlined three scenarios for the Strait of Hormuz in a report on March 2, with the most extreme scenario of a complete blockade potentially pushing Brent crude oil prices towards $200 per barrel.
According to CCTV News, Iran's Supreme Leader Ali Khamenei was assassinated on the morning of February 28. Israel stated that Khamenei and his senior aides, including Ali Shamkhani, the Secretary of Iran's Defense Council, and Mohammad Pakpour, the Commander of the Islamic Revolutionary Guard Corps, were all killed in the airstrike. Subsequently, media reports indicated that the IRGC announced a blockade of the Strait of Hormuz and targeted U.S. military bases stationed in Qatar, Kuwait, the UAE, and Bahrain.
The oil market reacted swiftly to these events. According to Bloomberg, several commercial vessels received broadcasts from the Iranian Navy stating that passage was prohibited, and major shipping companies, including Hapag-Lloyd and Maersk, announced a suspension of navigation through the Strait of Hormuz. OPEC+ announced it would increase production by 206,000 barrels per day in April to ease market tensions.
Deutsche Bank proposed three scenarios regarding the situation in the Strait of Hormuz: if there is a rapid reopening within two weeks, oil prices will fall back to the $70 range; if the current ambiguous blockade continues, oil prices will fluctuate between $80 and $100 due to attack risks and insurance halts; if it evolves into a complete forced blockade, leading to a total interruption of crude oil exports from the region and OPEC's inability to respond, Brent crude could soar to $200. The extent of damage to Kharg Island and the duration of the blockade will become key variables for future assessments.
<h2>Key Oil Market Dynamics: Export Damage, Blockade Realized</h2>
According to Deutsche Bank, the direct impact of this conflict on the oil market focuses on the following aspects.
Damage to Export Facilities: Iran's semi-official news agency Mehr reported an explosion on Kharg Island in the Persian Gulf. This island is Iran's main offshore crude oil export hub, featuring two docks on the east and west. Notably, Israel had intended to avoid striking Kharg Island in 2025.
Blockade Announced, Shipping Halted: Although U.S. officials stated that Iran has not yet taken substantial action to blockade the strait, the British Navy reported &#34;significant military activity&#34; in the Strait of Hormuz, the Gulf of Oman, and the northern Arabian Sea. According to Bloomberg, most commercial vessels have turned back or are waiting at the entrance of the strait, effectively halting commercial shipping. The UK Maritime Trade Organization (UKMTO) stated that Iran's blockade has no legal binding force under international law, and vessels still have the right to navigate freely in international waters.
OPEC+ Increases Production: OPEC+ has confirmed an increase of 206,000 barrels per day in April, with Saudi Arabia's export volume in February estimated to have risen by 440,000 barrels per day compared to January. However, Deutsche Bank pointed out that this move is part of regular production arrangements and does not constitute an emergency activation of spare capacity
Houthi Resurgence in Yemen: According to reports, the Iran-backed Houthi forces in Yemen have announced the resumption of attacks on shipping in the Red Sea. Deutsche Bank believes that the market impact of this risk is relatively limited, as commercial shipping has previously demonstrated the ability to reroute around the Cape of Good Hope.
<h2>OPEC Has Capacity, But the Strait Must Reopen</h2>
Deutsche Bank believes that the core contradiction of the current situation is: OPEC has ample spare capacity to fill the gap in Iranian exports, but this is contingent on the Strait of Hormuz remaining open.
Iran's export volume in January was approximately 1.6 million barrels per day, while the core OPEC spare capacity, centered around Saudi Arabia, Kuwait, and the UAE, is about 2.8 million barrels per day, theoretically sufficient to cover any supply gap. The usual operation is to immediately utilize onshore tank inventories to smooth the transition period, while actual production increases will take some time.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/81b46cec-1763-4c64-87d0-fdfc1a609a63.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/81b46cec-1763-4c64-87d0-fdfc1a609a63.png"/>
However, Deutsche Bank also points out that if Iran's export capacity suffers severe damage, its strategic logic will change— the cost of blocking the Strait of Hormuz will become lower, and the motivation will correspondingly increase. Nevertheless, Iran still needs to weigh the costs of its relations with Gulf countries.
In terms of enforcement capability, Deutsche Bank notes that the US-Israel coalition has targeted Iran's naval capabilities, and with the strong naval presence of the US in the region, Iran's actual ability to enforce the embargo may significantly decline, even approaching zero. The key issue is that there are currently no signs indicating that Iran has laid mines in the strait—if no mines are laid, a blockade can be quickly lifted under appropriate conditions; if Iran lays mines on a large scale, the US Navy will require months to clear them.
<h2>Deutsche Bank's Three Scenarios: $70 to $200 Range Undetermined</h2>
Based on existing information, Deutsche Bank has categorized the situation in the Strait of Hormuz into three scenarios, with the extent of damage to Kharg Island and the duration of the strait's blockade being the two critical unknown variables.
Scenario One: Strait Reopens. If Iran announces the opening of the strait within two weeks as part of a ceasefire precondition, and if Iran's export capacity is not substantially constrained or the damage to Kharg Island is quickly repaired, oil prices will stabilize around $80 per barrel before retreating to the $70 range.
Scenario Two: Ambiguous Blockade (currently the closest to reality). Iran maintains its blockade declaration, with missile or drone attacks capable of damaging vessels, but mines have not yet been deployed. A small number of vessels can still pass, and commercial shipping remains generally cautious. In this scenario, despite OPEC initiating emergency production increases, Brent crude will fluctuate between $80 and $100 per barrel, and shipping insurers may suspend insurance related to the Strait of Hormuz.
Scenario Three: Comprehensive Forced Blockade. Iran implements a comprehensive blockade through large-scale mine laying, anti-ship missiles, warships, naval drones, and helicopters. The US Navy attempts to clear mines, but Iran continues to replenish them, forcing commercial vessels to long-term avoid the strait, reducing transit flow to zero. In this scenario, Deutsche Bank expects Brent crude to surge to $200 per barrel, as all regional crude and refined oil exports will be completely interrupted, leaving OPEC with little response
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3a53351c-3c30-47c7-9353-941cf453dd02.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3a53351c-3c30-47c7-9353-941cf453dd02.png"/>
<h2>Situation Trend: The Tug of War Between De-escalation and Re-escalation</h2>
Deutsche Bank pointed out that the direction of the situation in the coming days will be shaped by multiple forces. Factors leaning towards de-escalation include: the pressure of rising oil prices on Trump's domestic politics, the divergence in the U.S. Congress regarding the joint U.S.-Israel strikes against Iran, and the Gulf countries' prioritization of macroeconomic stability and economic diversification agendas.
Factors hindering de-escalation include: how Iran responds to the death of the Supreme Leader, the subsequent reactions from the U.S., Israel, and the Gulf Cooperation Council, as well as the policy direction of Iran's new leadership. On the leadership issue, experts believe that Mojtaba Khamenei, the son of Khamenei, and members of the Larijani family are the two main succession options, but &#34;neither has a clear consensus base.&#34; The possibility of regime collapse is considered limited, as the Islamic Revolutionary Guard Corps has a solid institutional foundation, &#34;despite widespread and genuine public discontent, divisions and repression have limited its political transformation.&#34;
In terms of the oil market's benchmark assumptions, Deutsche Bank noted that prior to the outbreak of this conflict, Brent crude oil had already implied a risk premium of about $6 to $8. If we only consider the fundamental changes since October to November, where both Iran and Russia have reduced exports by about 300,000 barrels per day, the reasonable fair value is approximately $65 per barrel, rather than the previous benchmark of $60. Shipping data shows that floating inventories at sea have sharply declined since mid-January, with an average depletion rate of 1.26 million barrels per day, which has somewhat offset the impact of export reductions.
Kpler analysis believes that &#34;a temporary slowdown, detours, or enhanced maritime security inspections&#34; are more likely scenarios than a long-term comprehensive blockade, and Deutsche Bank currently characterizes the status of this conflict as closest to Scenario Two

Deutsche Bank categorizes the situation in the Hormuz Strait into three scenarios: if it reopens within two weeks, oil prices will fall back to the $70 range; if the current "ambiguous blockade" continues, oil prices will fluctuate between $80 and $100; if it evolves into a large-scale "forced blockade" that renders OPEC's production increase ineffective, Brent crude could soar to $200. The extent of damage to Kharg Island and the duration of the blockade will become the core variables for assessing the future

- The Middle East situation has escalated, creating significant uncertainty in the global energy market, with Deutsche Bank predicting Brent oil could reach $200 per barrel under extreme conditions.  
- Following the assassination of Iranian leader Khamenei, the IRGC announced a blockade of the Strait of Hormuz, impacting shipping and leading to OPEC+ planning a production increase to ease market tensions.  
- Deutsche Bank outlined three scenarios for the Strait's situation, with potential price fluctuations ranging from $70 to $200 per barrel, dependent on the duration and severity of the blockade and damage to export facilities.

Wallstreetcn

Deutsche Bank AG

Pro Ultr Bloomberg Crude Oil

VanEck Oil Services ETF

SPDR Energy Select

Us Brent Oil

SPDR O&G Ex & Prd

ISHRS S&P Glb Engy

Pro Ultrshrt Crude Oil

iShares US Oil & Gas Expl & Prod

United States Oil Fund LP

Pro K1 Free Crude Oil

If the Strait of Hormuz is completely blocked, will oil prices surge to $200? Deutsche Bank analyzes three scenarios