Hedge fund manager Paul Tudor Jones expects oil prices to rise by a further $20 to $25 per barrel as the US-Iran conflict continues, warning that a sustained rally could put significant pressure on equity markets, according to a report by CNBC.

Speaking on CNBC's Squawk Box on Tuesday, the founder and Chief Investment Officer of Tudor Investment said he remains bullish on oil, citing the limited prospects for a resolution to the conflict ahead of the US midterm elections in November.

West Texas Intermediate (WTI) crude futures were trading at approximately $92.50 per barrel on Tuesday morning. A rally of the magnitude forecast by Tudor Jones would push prices above their previous 2026 closing high of just under $113.

Tudor Jones warned that a further surge in energy prices would be particularly challenging for equities, although US stocks have so far demonstrated resilience to oil market volatility.

The S&P 500 fell just over 7% at its March low following the outbreak of the US-Iran conflict on 28 February, a smaller decline than analysts had anticipated given the scale of the initial oil price increase.

Oil prices subsequently peaked in early April before falling below $70 per barrel in June. Prices began recovering in July as tensions in the Middle East escalated and uncertainty persisted over shipping through the Strait of Hormuz, a key route for global oil supplies. Crude reached almost $106 per barrel in September before retreating.

Beyond energy markets, Tudor Jones also expects 2027 to present challenges for equities, with potential initial public offerings from major technology companies, including Anthropic and OpenAI, likely to increase the supply of shares available to investors.

While he sees limited scope for a diplomatic resolution before November's elections, Tudor Jones suggested that President Donald Trump could seek to negotiate an end to the conflict following the vote, arguing that the current situation is unlikely to be sustainable over the longer term.