Speaking to CNBC-TV18, Agarwal said the outlook for oil markets remains highly fluid, with multiple scenarios playing out depending on how the geopolitical situation evolves. “If the situation persists as it is, S&P Global Energy analysts expect prices could rise to as much as $200 per barrel in the coming months,” he said, flagging a sharp upside risk to crude.
The warning comes amid escalating tensions after Donald Trump threatened to blockade the Strait of Hormuz following the collapse of US-Iran talks in Islamabad. While the US Navy has begun enforcing restrictions, the Pentagon has clarified that the move is not a complete blockade and will primarily target vessels linked to Iranian ports. Iran, however, has termed the move illegal, with its military warning of severe consequences for any hostile naval presence in the region.
Agarwal noted that the actual impact of a naval blockade remains uncertain, particularly given that flows through the strait are already severely constrained. “The strait used to have about 150 vessels passing through every day; right now it is about eight to ten,” he said, adding that even a marginal disruption could have outsized effects on already tight global supplies.
He highlighted that the oil market is currently facing a significant supply-demand imbalance, with an estimated 10 million barrels per day shortfall. This gap, he said, is forcing countries to adjust through demand destruction rather than immediate supply recovery. “The current crisis has left about a 10 million barrels per day hole in the crude oil market,” Agarwal said.
The impact is being felt most acutely in Asia, where major importers like India and China are struggling to secure physical crude. Agarwal said refiners in the region are competing for limited cargoes as floating inventories continue to decline. “With each passing day that this crisis continues, it drains the already limited floating inventories around the world,” he noted.
As a result, high prices and supply shortages are beginning to curb consumption. Agarwal pointed out that this could translate into reduced industrial activity, lower refinery runs, and policy interventions by governments. “Across Asia, we are seeing demand destruction happening due to loss of supplies and because oil has become too expensive to consume,” he said.
Despite the sharp upside risks, Agarwal outlined a range of possible outcomes. In a base-case scenario, some normalisation in flows by the end of April could see Brent prices ease from around $120 per barrel to about $100 in May and June. A more optimistic scenario, where Iran agrees to conditions and supply resumes quickly, could push prices down to around $80 per barrel next month.
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The geopolitical backdrop remains volatile. The breakdown of negotiations in Islamabad after prolonged talks, coupled with rising military posturing, has triggered global concern. Leaders including Keir Starmer and Emmanuel Macron have called for maintaining freedom of navigation, while China and ASEAN nations have urged restraint.
Even as a fragile ceasefire between the US and Iran appears to be holding for now, the situation around the Strait of Hormuz remains a critical flashpoint for global energy markets, with any prolonged disruption likely to send oil prices sharply higher and deepen the ongoing energy crisis.
