Saudi Oil Officials Project $180 per Barrel Price Surge

Saudi Arabia's oil officials are working on internal projections indicating that crude prices could surge past $180 per barrel if the ongoing Iran conflict and related supply disruptions continue until late April. This projection is being treated as a base-case scenario by several officials in the Gulf's largest oil producer, reflecting growing concern that the current energy shock may not be short-lived.

Supply Shocks Deepen

The price outlook is being shaped by a series of attacks on energy infrastructure across the region. Iran retaliated after an Israeli strike on its South Pars gas field by targeting Qatar's Ras Laffan energy hub and other Gulf infrastructure, including Saudi facilities at Yanbu. The Yanbu terminal is significant as it connects to a pipeline designed to bypass the Strait of Hormuz, a critical chokepoint through which roughly one-fifth of global oil supply flows.

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Price Spike Already Visible

Oil prices have already surged in response to the conflict. Crude has risen about 50% since late February, when tensions escalated. Brent crude has traded around $115-$120 per barrel, while regional benchmarks such as Oman crude have spiked significantly higher.

Saudi Aramco Faces Key Pricing Decision

Saudi Aramco, the state-owned oil giant, is set to finalise its official selling prices (OSPs) by April 2, a decision that will signal how Riyadh balances higher revenues with demand stability. The company declined to comment on the matter.

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Market Positioning Shifts

Market positioning is also shifting. The Wall Street Journal reported strong activity in options markets around $130-$150 price levels, with traders increasingly discussing scenarios where oil could reach $180 or even $200 in more extreme cases.

Economic Impact Already Visible

Higher crude prices are already feeding into consumer fuel costs. US gasoline prices have risen to around $3.80 per gallon from below $3 a month earlier, while diesel prices have climbed above $5 per gallon. Rising fuel costs are acting as a drag on household spending and increasing costs for businesses, particularly in logistics and manufacturing.

Inflation and Global Growth Risks Mount

The report highlighted broader macroeconomic risks tied to sustained high oil prices, including risks to Saudi positioning in global markets and potential demand destruction if prices reach $150 or higher.