Why oil could reach $200 a barrel, says former IMF economist

Oil prices have climbed amid unprecedented supply disruptions from the war in Iran. Olivier Blanchard, a former IMF economist, wrote that he finds it hard not to take as a central scenario that oil prices will remain very high for a long time, above current market levels.

He pointed to two main reasons: fully protecting ships in the Strait of Hormuz is virtually impossible, and there is no reason for Iran to stop threatening vessels there. That undercuts the idea that political moves alone — summed up by the TACO shorthand — will quickly calm markets.

JPMorgan analysts estimate a 16 million barrel per day shortfall from the shipping disruption. The International Energy Agency said it will release 400 million barrels from its reserves and called the conflict the largest supply disruption in the history of the global oil market.

Iran, Strait of Hormuz

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