Oil prices could spike to $120-$130 per barrel in the near term, with a risk of surging above $150 if supply flows through the Strait of Hormuz remain disrupted into mid-May, J.P. Morgan said in a note on Thursday.

J.P. Morgan’s base-case assumption is that the disruption to the strait will ultimately be resolved through negotiations following a period of supply strain and inventory drawdowns.

Under this scenario, oil prices are expected to remain elevated above $100 a barrel through the second quarter. Prices are then forecast to retrace in the second half of 2026, driven by a partial reopening of the strait and some normalization of oil inventories, the note added.

J.P. Morgan warned that the size and duration of any price spike would be key in determining the severity of the broader macroeconomic shock, raising the risk of depressed demand and a potential recession if high prices persist.

Oil prices jumped on Thursday in volatile trading after President Donald Trump said the U.S. would continue attacks on Iran.

(Reporting by Anmol Choubey and Ashitha Shivaprasad in Bengaluru. Editing by Cynthia Osterman)