$100 Oil Becomes New Normal as Middle East Conflict Rises

Professor Jari Eloranta of the University of Helsinki has warned that an oil price of $100 per barrel could become the new normal. The ongoing conflict between the US and Iran has caused a significant increase in crude oil prices, with Brent crude rising from around $70 per barrel before the war began to slightly above $100 on Thursday.

According to Reuters, Goldman Sachs predicted that the price of oil could reach as high as $120 per barrel if the situation does not stabilize soon and maritime routes in the Middle East do not resume normal operations. Eloranta considers this scenario possible, saying that several months ago he would not have called a price increase to this level realistic.

The professor noted that states and private market participants used significant volumes of oil reserves to calm the market, but these stocks have already been depleted. As a result, new supply disruptions could have a much stronger impact on the oil price than before, with Eloranta warning that a price of $120 per barrel or higher would already mean a serious crisis for the global economy.