Saudi Arabia sees a spike to $180 oil if energy shock persists past April

Saudi oil officials are privately alarmed that crude prices could surge past $180 a barrel if the Iran war and resulting supply disruptions continue into late April.

The base-case projection inside the Kingdom’s energy establishment sees Brent futures climbing well beyond current levels, with Gulf Oman crude already exceeding $166 a barrel in volatile trading. Physical Saudi Arabian light crude is selling to Asian buyers at around $125 a barrel through the Red Sea port, but officials expect shortages to tighten further next week, pushing prices toward $138 to $140.

By early April, with the Strait of Hormuz still closed and no end to attacks on Gulf infrastructure, prices could reach $150, then accelerate to $165 and $180 in the following weeks.

While high prices would temporarily boost Saudi revenues, the regime views rapid spikes as deeply destabilizing. “Saudi Arabia generally does not like too-rapid increases in oil, because that then creates long-term market instability,” said Umer Karim of the King Faisal Center for Research and Islamic Studies.

Extreme prices risk permanent demand destruction: consumers shifting to public transport, manufacturers slowing output, or economies entering recession. Gasoline in the U.S. already averages $3.88 a gallon, up from $2.93 a month ago, with diesel at $5.10. At $150 Brent, analysts predict widespread cutbacks in driving, industrial activity and travel.

Saudi Aramco modelers are racing to finalize April official selling prices by April 2, incorporating customer demand signals and war developments. Traders are placing heavy bets on $130 to $150 next month, with growing positions for even higher levels.

Rebecca Babin of CIBC Private Wealth warned, “I don’t think $150 is out of the question in another month…You start talking about June, I’ll give you $180.”