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If the Iran war takes oil above US$120 a barrel, how bad could the shock get?

With the US-Israel war on Iran entering its third week, the world faces the risk of a more severe oil shock as military strikes expand to major energy infrastructure, heightening fears of a prolonged conflict. In this explainer, the South China Morning Post examines the latest developments and factors driving oil price volatility and assesses the potential impact on the global economy. Energy infrastructure: what is the latest? An Israeli air strike hit energy facilities on Wednesday at Iran’s...

Mar 19, 2026 &03001919202631; 12:00 UTC www.scmp.com Trending 5/5

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Negative for markets

Sentiment score: -60/100

High impact Short-term (days)

WHAT THIS MEANS

The ongoing conflict involving Iran and potential strikes on energy infrastructure could push oil prices above $120 per barrel, leading to higher global energy costs and inflationary pressures that may slow economic growth. This scenario could negatively impact consumer spending and industrial activity worldwide, while potentially benefiting oil producers in the short term. However, markets may have already factored in some geopolitical risks, limiting the immediate shock.

AI CONFIDENCE

70% High

SENTIMENT GAUGE

NEWS POWER SCORE

AFFECTED ASSETS

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Oil (WTI Crude)

CL=FCommodity

Expected to rise

Disruptions to Iranian oil supplies from escalating conflicts could tighten global markets and drive prices higher, though much of this risk may already be priced in.

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S&P 500

^GSPCIndex

Expected to decline

Higher oil prices could exacerbate inflation and hinder economic recovery, posing risks to stock markets despite any macro headwinds like slowing growth.

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Euro / US Dollar

EURUSDCurrency

Expected to decline

A surge in oil prices might strengthen the US dollar as a safe-haven, putting downward pressure on the euro, though broader forex volatility could occur.

PRICE HISTORY

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⚡ SUGGESTED ACTION

Consider hedging equity positions with options due to potential market downturns from oil shocks, but avoid aggressive bets on oil commodities as the market may have already anticipated these risks and outcomes remain uncertain.

KEY SIGNALS

Escalating Middle East geopolitical tensionsPotential oil supply disruptions

SECTORS INVOLVED

Energy

Analysis generated on Mar 23, 2026 at 00:02 UTC

Disclaimer: This analysis is generated by artificial intelligence for informational purposes only and does not constitute financial advice, investment recommendation, or solicitation. Original reporting by SCMP Business. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

If the Iran war takes oil above US$120 a barrel, how bad could the shock get?

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