Shortly after the United States and Israel first attacked Iran on February 28, analysts warned that war could drive oil prices above $100 a barrel.

Now, less than three weeks into the conflict, market watchers are seriously considering the possibility of prices surpassing $150 or even $200.

On March 9, the price of Brent crude – the global benchmark – hit nearly $120 and has not dropped below the $100 threshold since March 13.

An Israeli strike on Iran’s South Pars gasfield on March 18, prompting Iranian attacks on oil and gas facilities in Qatar, Saudi Arabia and the United Arab Emirates, further pushed crude prices up on Wednesday to more than $108 a barrel.

Analysts widely agree that prices have room to move much higher if the Strait of Hormuz, the conduit for about one-fifth of global oil supplies in peacetime, remains effectively closed in the coming weeks.

The only real point of contention is by how much.

“Benchmark Middle Eastern crudes like Oman and Dubai have already crossed the $150 threshold, so $200 is already within sight, even if not for Brent and West Texas Intermediate,” Vandana Hari, the founder of oil market analysis provider Vanda Insights, told Al Jazeera.

“How much further crude climbs from here almost entirely hinges on how much longer the Strait of Hormuz remains closed,” Hari said.

After Iran declared the strait closed early in the conflict – and threatened to strike any ships attempting to pass – traffic all but stopped.

US President Donald Trump has failed to attract international support for a naval convoy to reopen the strait, while countries are scrambling to do deals with Iran for safe passage. Only a handful of ships – mostly Indian, Pakistani, Turkish and Chinese-flagged vessels – have been allowed to pass in recent days.

Countries have committed to releasing 400 million barrels of oil from emergency stockpiles in coordination with the International Energy Agency, the reserves cannot fully offset the halt of shipping through the waterway.

Singapore-based OCBC Group Research estimates that the global market is facing a daily shortfall of about 10 million barrels even when the reserves are taken into account.

Wood Mackenzie analysts said last week that Brent could soon hit $150 and that $200 was not “outside the realms of possibility” in 2026.

Iran has also invoked the prospect of $200 oil, warning through a military spokesperson last week that the world should “get ready” for such a spike.

“Strategic reserves and replacement barrels can stabilise prices if the market believes supply will meet demand, but if flows through Hormuz were materially disrupted for a sustained period, prices well above $100, even approaching $200, are plausible,” Chad Norville, president of industry publication Rigzone, told Al Jazeera.

“In several respects, the conditions today could allow for an even more dramatic move than the Gulf War, given the larger share of global supply potentially at risk and the wider imbalance between supply and demand that presents.”

Oil prices at $150 or higher would weigh heavily on the global economy.

The International Monetary Fund estimates that every 10 percent rise in oil prices, sustained over a year, would correspond with a 0.4 percent increase in global inflation and a 0.15 percent reduction in economic growth.

The highest Brent crude has ever reached is $147.50 per barrel at the height of the global financial crisis in 2008.

In today’s dollars, the all-time peak equates to about $224.

Adi Imsirovic, an energy expert at the University of Oxford, told Al Jazeera that oil at $200 a barrel “would be a major handbrake to the world economy”. He described the prospect of prices hitting such levels as “perfectly possible”.

“It would impact inflation, growth, employment and in some cases cause shortages of not just fuel but also materials such as fertilisers, plastics and the like,” he said.

Sasha Foss, an energy market analyst at Marex, London, offered a more sanguine outlook, however, calling the prospect of $200 Brent “pretty outlandish”.

Foss pointed to substantial increases in output by various countries, including the US, Canada, Argentina, Brazil and Guyana, as well as the existence of alternative supply routes, such as Saudi Arabia’s East-West Pipeline, as causes for optimism.

“We really saw on the back of the Russia-Ukraine war … the adage that a cure for high prices is high prices,” Foss told Al Jazeera.

“We saw a lot of production increases from other regions in the world.”

While prices will depend heavily on the resumption of traffic through the Strait of Hormuz, their trajectory will also be shaped by the law of supply and demand in other ways, too.

Buyers of goods and services typically start cutting back on consumption once prices rise above a certain level, a phenomenon known as “demand destruction”.

While demand for oil is less elastic than for most goods because it is difficult to replace or go without, prices would still moderate and start to come down after rising past a certain point.

“Nobody knows what that level is, but it may well be above previous nominal highs at $147 a barrel,” Bob McNally, president of Rapidan Energy Group, told Al Jazeera.

How high oil prices rise will depend on how fast “two countervailing tendencies – buyers chasing fewer barrels at any cost versus buyers exiting the market through demand destruction – play out” against each other, Gregor Semieniuk, a professor of public policy and economics at the University of Massachusetts Amherst, told Al Jazeera. (Al Jazeera, excluding headline)

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