Predicting the price of crude oil has always been risky. Long after sunset, traders say that with a half-smile, usually as they gaze at screens that glow red and green in dimly lit offices. Nevertheless, the same question remains: where will oil go next?
Futures markets reopened with a bang on Sunday night. WTI crude briefly approached $72 per barrel after rising more than 8%. Not far behind, flirting with $80, was Brent. Rising tensions in the Middle East and growing concerns about possible disruptions to traffic through the Strait of Hormuz were the obvious catalyst. However, fear alone rarely moves markets. They make decisions based on odds.
Investors currently appear to be pricing in a disruption rather than a disaster.
According to reports, tanker-tracking maps of vessels hesitating close to the Strait were displayed to energy desks in Singapore. A few turned away. Others waited for clarity while their engines hummed. When ships physically stop moving, it’s difficult to ignore how quickly the “risk premium” becomes apparent.
| Category | Details |
|---|---|
| Benchmark | WTI Crude Oil (Cushing, Oklahoma) |
| Global Benchmark | Brent Crude (North Sea) |
| Current WTI Price | ~$72 per barrel |
| Current Brent Price | ~$79 per barrel |
| Major Risk Factor | Strait of Hormuz (≈20% global oil transit) |
| Key Producer Group | OPEC+ |
| U.S. Production | ~13.6 million barrels per day |
| Delivery Hub | Cushing, Oklahoma |
| Reference | U.S. Energy Information Administration |
| Reference | OPEC Official Website |
Approximately 20% of the oil in the world travels through that slender channel. Oil doesn’t politely rise by a dollar or two if it closes, even for a short time. It has gaps. At the open, analysts have been speculating about numbers that are $8 to $10 higher. Some even go so far as to recommend $10 to $20 if the matter continues. That would make $90 oil affordable. Yes, one hundred dollars.
Here’s the tension, though.
Since late last year, oil has already increased significantly. Even before missiles started to fly, WTI was rising steadily from the mid-$60s. The fact that OPEC+ maintained production discipline contributed to that strength. came in part from consistent worldwide demand. Perhaps this is partly due to markets subtly wagering that geopolitical tensions would eventually erupt.
The current spike might be due as much to positioning as to panic.
In June of last year, similar tensions caused prices in New York to briefly rise before falling. Then, as supply kept coming in, Brent slipped back to the low $80s. The most extreme scenarios are now questioned by the market. The forecast for the price of crude oil today is influenced by this skepticism.
This time, though, feels different.
The rhetoric has become more heated. A level of uncertainty not seen in years has been brought about by U.S.-Israeli strikes on Iran. Iran has struck back. Premiums are being recalculated by shipping insurers. In the short term, slowing down traffic to a crawl can have almost the same impact as closing the Strait of Hormuz.
There are buffers on the supply side. Some of Saudi Arabia’s crude can be diverted to the Red Sea via its East-West pipeline. Through Fujairah, the UAE can avoid the strait. Significant production increases have already been promised by OPEC+, although they fall far short of what some had hoped for. These safety valves are important. They keep the worst-case scenario from turning into the norm. Demand, however, is still obstinate.
Despite discussions about electric cars and the energy transition, the world’s oil consumption is still close to record highs. There is still a need for fuel in emerging markets. The countries that produce the majority of seaborne crude, China, India, Japan, and South Korea, cannot simply change course overnight. One gets the impression that demand destruction would necessitate far higher prices than those of today as Asian refiners bid for cargoes.
What then constitutes a realistic crude oil price forecast?
Within a few days, if shipping resumes as usual and tensions subside, WTI may return to the mid- to high $60s. That makes sense. The memory of markets is short when supply is constant.
$90 becomes feasible if, as some fear, the conflict lasts for two weeks. Even a partial closure of Hormuz could cause Brent to rise toward $100. In extreme situations, some banks whisper $120, but that sounds more like a warning label than a prediction.
Inflation is another factor.
Increased oil feeds into the price of gasoline, airline tickets, and shipping. New pressure would be placed on central banks, which are already managing precarious growth. It’s still unclear if policymakers would modify rate paths or treat a spike as temporary. Just that uncertainty has the potential to increase volatility.
Last week, when I passed a gas station on the outskirts of London, the prices had not changed. Without giving the digital signs a second glance, drivers filled up. However, markets had already begun to adjust in anticipation of future developments. The invisible time when traders have responded but consumers have not is known as the “lag.” In times such as these, forecasting the price of crude oil becomes less about charts and more about geopolitics.
For WTI and Brent, technical analysts will identify resistance around $80 and $90, respectively. Patterns in charts are important. It’s important to have momentum. However, missiles are more important.
As this is happening, it seems like oil is once again a gauge of anxiety around the world. A signal, not just a commodity. Prices stabilize as long as ships continue to move. Market forces will take over if they don’t.
