—A Multi-Scenario, Multi-Stakeholder Analysis Using Horizontal Thinking—
Conflict Background
Since June 12, 2025, Israel has conducted airstrikes against Iran’s nuclear sites (Natanz and Fordow), IRGC infrastructure, and the state broadcaster IRIB headquarters—actions unprecedented in scale since 1979. Iran has responded with limited missile launches against northern Israel, while allied non-state actors such as Houthi forces continue harassing Red Sea shipping lanes[1].
2. Analytical Framework
To avoid single-angle bias, we apply horizontal thinking across four equally weighted dimensions:
- Supply–Demand Fundamentals
- Geopolitical Shock (Conflict Escalation)
- Macro-Economic Cycle (Demand Contraction)
- Conflict De-escalation (Peace Prospects)
3. Oil Price Scenarios
| Scenario | Probability | Brent Price Range (USD/barrel) | Key Drivers |
|---|---|---|---|
| 1. Supply–Demand Base Case | 50% | 60–70 | EIA projects a 2025 average of USD 66 with global inventories up by 0.8 mb/d; OPEC+ modest increases; U.S. shale tapering[2]. |
| 2. Geopolitical Shock | 20% | 100–120 | Strait of Hormuz blockade threats; damage to major export terminals; intensified attacks by non-state actors[4]. |
| 3. Demand Contraction (Recession) | 20% | 40–55 | Protracted rate hikes in advanced economies; slowdown in China/India; inventory builds driving oversupply[3]. |
| 4. Conflict De-escalation | 10% | 65–75 | Limited ceasefire or negotiated pause removes risk premium; major facilities intact; market rebalances[6]. |
3.1 Supply–Demand Base Case (50%)
Global oil balances remain near equilibrium. EIA forecasts Brent at USD 66 for 2025, supported by modest OPEC+ increases offsetting U.S. shale production cuts and a mild demand uptick[2]. This yields a steady USD 60–70 range.
3.2 Geopolitical Shock (20%)
An enforced closure of the Strait of Hormuz or direct hits on export infrastructure could cut supply by over 1 mb/d, propelling prices briefly above USD 100–120[4]. Historical precedents show oil can spike by over 7% in a single session amid such threats[4].
3.3 Demand Contraction (20%)
If advanced-economy recessions deepen and China/India growth stalls, inventories could swell further. The IEA warns of a daily non-OPEC+ output rise of 1.3 mb/d in 2025, exacerbating oversupply and pulling Brent toward USD 40–55[3].
3.4 Conflict De-escalation (10%)
Should diplomatic channels yield a limited ceasefire, the geopolitical premium could evaporate, guiding prices to a stable USD 65–75 zone. Short-term forecasts by Rystad Energy and Citi align with this outcome[6].
4. Stakeholder Implications
| Stakeholder | Impact | Recommended Actions |
|---|---|---|
| Energy Producers | Cash-flow volatility from price swings | Enhance price-linked hedging; maintain flexible CAPEX/OPEX schedules |
| Financial Institutions & Funds | Portfolio value swings; credit spread pressures | Conduct frequent multi-scenario stress tests; bolster risk-weighted capital |
| Consumers & Industries | Rising fuel costs → higher logistics & production expenses | Renegotiate long-term fuel contracts; accelerate adoption of LNG and renewables |
| Policymakers | Inflationary pressures; energy security risks | Utilize strategic reserves; implement tax relief or subsidies; coordinate internationally to stabilize markets |
5. Conclusion
While the base case of USD 66 (50% probability) remains the most likely, a 20% chance of a supply-side shock mandates defensive hedges such as put options and volatility-linked instruments. Equally, a 20% risk of demand contraction underscores the need for portfolio defensiveness, and the 10% peace prospect warrants tactical position adjustments. A multi-scenario framework enables stakeholders to navigate the heightened uncertainty driven by the Iran–Israel conflict.
References
Institute for the Study of War (ISW), Iran Update Special Report, Evening Edition, June 16, 2025
https://www.understandingwar.org/backgrounder/iran-update-special-report-june-16-2025-evening-edition
U.S. Energy Information Administration (EIA), Short-Term Energy Outlook, June 2025
https://www.eia.gov/outlooks/steo/report/
International Energy Agency (IEA), Oil Market Report (May 2025)
https://www.iea.org/reports/oil-market-report-may-2025
Reuters, “Oil prices surged over 7% amid Iran-Israel conflict,” June 13, 2025
https://www.reuters.com/markets/commodities/oil-prices-surge-amid-iran-israel-conflict-2025-06-13/
Barron’s, “Middle East conflict could drive oil to $120,” June 2025
https://www.barrons.com/articles/middle-east-conflict-could-drive-oil-to-120-51624567890
Rystad Energy & Citi, Oil Price Forecast 2025
https://www.rystadenergy.com/analysis/oil-price-forecast-2025
