Brent: Wider range volatility and concerns over worldwide economic expansion – MUFG

Oil Market Outlook Amid Geopolitical Tensions

Halpenny highlights that Trump’s decision to extend the pause solely for attacks targeting energy infrastructure, along with Iran’s modest move to permit a handful of tankers passage, indicates that restrictions in the Strait of Hormuz are likely to persist. According to MUFG, Brent crude prices are expected to trend upward, and in a more extreme case—where prices reach between $120 and $160 per barrel—there is a heightened chance of a significant risk-off event and mounting fears of a global economic downturn.

Persistent Supply Challenges and Market Volatility

Since the current pause, which lasts until April 6, only covers energy-related targets, the conflict appears poised to drag on. The longer the Strait of Hormuz remains inaccessible, the more acute the global energy supply issues may become.

Although Iran has allowed ten tankers to transit, this limited concession is unlikely to lead to a substantial increase in shipping activity soon, given the strategic importance of the Strait for Iran’s leverage.

As a result, oil prices are expected to keep climbing, which could trigger a broader move away from risk assets as concerns about a worldwide recession intensify.

Should Brent crude oil surge into the $120–$160 per barrel range and equity markets suffer deeper losses, the US Dollar Index (DXY) might approach the 105 mark, representing a 7%–8% increase from levels before the conflict began.

(This report was developed with assistance from an AI tool and subsequently reviewed by an editor.)