Could Oil Really Hit $200 a Barrel?

Crude Oil is trading around $75 a barrel, up more than 30 per cent this year, and tensions across the Middle East are once again dominating headlines. The question now is whether this is just another short-term spike or the beginning of something bigger?

To answer this question, let's wind back to the early 2000’s. Following 9/11 in 2001, oil was trading near $17 a barrel. As conflict spread across the Middle East and global demand surged, prices climbed relentlessly to $147 by 2008. Much of that move happened relatively quickly between 2005 and 2008, when oil surged by around 170 per cent. If crude oil were to make a similar move from today’s level near $75, it would push prices close to $200 a barrel.

Since 2008, oil has struggled to stay above $100 a barrel during crises, and this is important. A major reason has been the rise of U.S. shale production, which tends to increase supply whenever prices surge. However, that ceiling only holds when supply chains remain intact, and right now, spare oil production capacity is quite healthy. This fact alone raises the argument for $100 being the ceiling for oil, but here comes the big what-if?

Could weakening global supply chains push crude oil higher?

The world's biggest supply route, the Strait of Hormuz, is under serious threat. This narrow shipping lane carries about 20 per cent of the world’s oil supply. Maritime insurers have begun pulling war-risk coverage for vessels operating in the Gulf as tensions escalate, leaving many tankers unable to move through the region.

At the same time, energy infrastructure is increasingly becoming a target. Iranian drones recently struck Saudi Arabia’s Ras Tanura refinery, the kingdom’s largest oil processing facility and a major export hub. Add to that Venezuela’s production constraints, Ukraine’s attacks on Russian energy infrastructure, and the possibility that China may need to compete for Iranian barrels on the open market, and suddenly, global supply looks far thinner than many assume.

From a technical perspective, crude appears to be breaking out of the downtrend that has dominated the last few years, and if the price can hold above $80 a barrel, a move back to $100 per barrel is entirely realistic if tensions persist. Reaching $200 would require a major supply disruption, but history shows that when geopolitics collides with energy supply, prices can move faster than most people expect.

For Australians, higher oil prices feed directly into petrol, freight, and food prices, and into inflation, which can keep pressure on the Reserve Bank to hold interest rates higher. For investors and traders, however, volatility in the energy market creates opportunity, particularly in energy stocks, which have lagged the market for years and may now be entering a powerful macro cycle. So, stay tuned.

What are the best and worst-performing sectors this week?

The best-performing sectors include Energy, up over 7 per cent, followed by Consumer Staples, up under one per cent and Communication Services, down just over half a per cent. The worst-performing sectors include Consumer Discretionary and Materials, both down over 4 per cent, followed by Real Estate, down over 3 per cent.

The best performing stocks in the ASX top 100 include Ampol Limited, up over 13 per cent, followed by Whitehaven Coal, up over 11 per cent and Santos Limited, up over 8 per cent. The worst-performing stocks include Life360, down over 12 per cent, followed by Eagers Automotive, down over 10 per cent and Challenger Limited, down over 9 per cent.

What's next for the Australian stock market?

This week, sellers took control, pushing the All-Ordinaries Index down 2.8 per cent by Thursday’s close. It marks the sharpest pullback so far this year, as rising fears of a prolonged conflict with Iran weighed on investor sentiment. The decline comes just one week after the market printed a fresh all-time high of 9,435 points, with the index now trading back near the 9,100 level and potentially heading toward support around 9,000.

Most sectors are lower for the week, although Energy stood out as the clear exception. Surging oil and gas prices lifted the sector, with related areas such as uranium and coal stocks also benefiting from the move higher in energy markets.

You may have seen headlines claiming that “billions have been wiped off the market” or that the stock market has “crashed”; however, context matters. The entire Australian share market was worth roughly $3.34 trillion as of January 2026. So, when media reports highlight $70 billion lost in a day, it sounds dramatic, but it represents only a small fraction of the total market value.

From a technical perspective, the current pullback is not yet cause for concern. The market appears to have simply retraced back toward the natural upward momentum that has been in place since the November 2025 low. As long as that level holds, particularly above 9,000, the broader outlook remains constructive. Should the index break below 9,000, the next major support sits around 8,800. On the upside, a move back above 9,400 would be the next step toward reopening the path to the 10,000 level by year-end.

As I’ve said before, 2026 is shaping up to be a trader’s market. Active investors who focus on sectors and individual opportunities are likely to outperform passive strategies. This year, the tide won’t lift every stock, so staying selective, following price action, and ignoring the noise from headlines will be key to staying ahead of the crowd.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.

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