Satellite image of an oil refinery damaged by fire in Saudi Arabia earlier this year. Satellite image (c) 2026 Vantor.
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The Iranian and U.S. blockades of the Strait of Hormuz have already constrained shipments of oil and gas from the Persian Gulf. They could, however, be only the opening phase of a more severe and prolonged disruption: widespread attacks on regional oil refineries.
In a scenario analyzed by Morgans, an Australian brokerage distinct from the larger U.S. firm sharing its name, refinery outages could push crude prices to $150 a barrel and potentially higher.
“An attack that removes major refining or export capacity would eliminate supply for years, and the market is not prepared to absorb the shock,” Morgans said.
Oil will rise sharply if refineries become the prime target of the Iran war.
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“Rather than a temporary interruption caused by blockades or attacks on tankers, the region would lose a significant portion of oil-processing capacity that could take years to replace.”
“This is not our base-case scenario, but if it occurs, we expect Brent crude to move above $150 per barrel.”
In its latest Oil & Refining report, the broker also put forward another thesis: China could become “the new OPEC,” not by controlling supply but by shaping global demand.
That thesis is more complex than the potential damage from refinery losses, which Morgans describes as “the next Hormuz.”
The Next Chokepoint
“Refineries are emerging as the next critical chokepoint for the global economy, with diesel markets remaining particularly tight,” the broker said.
“For oil, the issue is no longer simply the size of reserves. It is the growing risk that essential infrastructure could be attacked and remain out of service for years.”
Warnings about a major infrastructure outage have intensified over several months. Refineries on both sides of the conflict have been struck, followed last week by the closure of Saudi Arabia’s east-west oil pipeline.
Vantor satellite image shows fire damage and extensive blackened areas in and around the East-West pipeline pumping station in Saudi Arabia following the September 11, 2026 drone attack and resulting fires. Satellite image (c) 2026 Vantor.
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Morgans’ thesis on China’s expanding role in oil markets begins with a simple observation: Chinese demand is one reason Brent has not already reached $150 a barrel.
China holds an estimated 1.4 billion barrels in stockpiles, while demand for refined products is declining as electric-vehicle adoption grows. The country has already reduced oil imports by four to five million barrels a day.
With large inventories and weakening demand, China need only buy oil when prices are attractive.
China the OPEC of Oil Demand
“Historically, OPEC has steered the market through supply. In our view, China now does so through demand, restocking when prices suit its interests,” Morgans said.
“It may also time purchases around its geopolitical interests in Washington or Brussels.”
The broker cautioned that U.S. refineries may not be able to sustain the increased production intended to offset shortages from the Middle East. Rising domestic demand for gasoline and diesel could soon become a politically sensitive issue.
“U.S. refineries have been helping stabilize the global market by offsetting much of Russia’s absence from export markets,” Morgans said.
“But growing pressure is building to keep more of that supply within the United States.”