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Sentiment
Oil Price Is Going To 100$
Within just a few hours, after the US and Israeli strikes on Iran, Brent crude surged more than 7% and approached $80. WTI also climbed over 7%. Suddenly, the entire market turned its attention to the Middle East.
But the issue is not simply that prices rose.
The real question is why they rose. And more importantly… what could come next.
Because today we are not just talking about an increase in oil prices. We are talking about how a 33 kilometer strait can shape the global economy.
THE ESCALATION IN THE MIDDLE EAST
Following the American and Israeli strikes on Iranian targets, the situation escalated dangerously. Donald Trump spoke of a military operation that could last for weeks.
Here is the critical point. Markets do not react only to what is happening. They react to what they fear might happen.
And what do they fear? That the conflict could disrupt the global oil supply.
That is why we immediately saw Brent approaching $80, oil stocks strengthening, and companies such as Exxon Mobil ($XOM) and Chevron ($CVX) moving higher. The market is adding what is known as a risk premium.
And this is where the Strait of Hormuz enters the picture.
THE STRAIT OF HORMUZ
The Strait of Hormuz lies between Oman and Iran. Approximately 13 to 15 million barrels of oil pass through it every day. That represents about 20% of global consumption and more than 30% of global seaborne oil trade. At the same time, massive volumes of liquefied natural gas also transit through the same passage.
Countries such as Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait depend on this route to export their production. If this strait is blocked, even temporarily, the consequences would be immediate.
Most analysts believe that a full closure is not the most likely scenario, since the United States has the military capability to prevent such a move. However, it does not need to close entirely. Isolated attacks on tankers, warnings to commercial vessels, or heightened risk in the region would be enough to create disruption.
And when shipping companies are afraid, they stop or delay operations. When they stop, supply declines. And when supply declines, prices rise.
Now let me consider the more difficult scenario. If the Strait of Hormuz remains closed for an extended period, or if there is a serious attack on energy infrastructure in Saudi Arabia or other Gulf countries, then we are talking about a genuine supply shock.
In such a scenario, prices could exceed $100 per barrel.
Some analysts are already discussing the possibility of triple digit oil. This is where comparisons are made to the 1970s, to the Arab oil embargo and the Iranian Revolution, when the global economy experienced an energy shock, inflation surged, and a recession followed.
We are not saying this will happen. But we are saying that the possibility exists, and the market is aware of it.
THE DOMINO EFFECT ON GLOBAL TRADE
And it does not stop with oil.
Major container shipping companies such as Maersk, Hapag Lloyd, CMA CGM, and MSC have already suspended transits through Hormuz and have frozen routes through Bab el Mandeb and the Suez as well. Many vessels are being forced to sail around Africa.
This means longer voyages, higher fuel costs, delays, and more expensive freight rates. And when transportation costs rise, product prices rise. In other words, inflation.
We are not talking only about an energy crisis. We are talking about a potential global trade disruption. Maritime trade does not have easy alternatives. If it is seriously disturbed, the domino effect could impact everything from raw materials to supermarket shelves.
INVESTMENT IMPLICATIONS
So what does all this mean for investors? The key factor is duration.
If the crisis lasts only a few days, much of the fear may already be priced in. But if it lasts for weeks or escalates further, we could see pressure on markets, a return of inflationary pressures, and delays in interest rate cuts.
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18 commentshttps://www.reddit.com/r/energy/comments/1rk18d4/oil_price_is_going_to_100/
https://www.reddit.com/r/energy/comments/1rk5drn/oil_price_is_going_to_100/
This post has been shared on Reddit by @davideownzall, @theworldaroundme through the HivePosh initiative.
@davideownzall please mind sharing in the same subreddit
mine is older 😅 13h ago, @theworldaroundme is the most recent 11h ago
my bad!
Oh, I beg your pardon!
World goes full retard everytime some other shit ends
True, we are all retarded.
Oil on the move.
Yeah
Nah not $100 anytime in 2026. Any takers ? I’m down to bet
Today, China banned all exports of refined oil, gasoline, diesel, etc. I believe$100 will come sooner than we expect if the war continues for more time.
$88.36 price just hit….. You should have taken that bet! Looks like I underestimated things. I still think we’ll end year lower than current price but a spike even ultra temporary to $100 looking very possible, easily hit from here since we talked a few days ago. I locked in a bet on price for a year out. We’ll see what happens but I think it collapses back down when the most feared outcomes don’t happen. But no question $100 looking more likely for at least a visit short term. $11.00 cushion ain’t much. I could still see it back at and below $70 quite fast, but that wasn’t the point, point was simply hitting $100 or not. Not how short term or not its visit would be. I’d say we can easily end up still not hitting it, but I can’t claim that with high degree anymore. I underestimated how the worst case would be at least temporally priced in .
It seems that today oil almost reached$120.
It’s at $102 now, (WTI is what most are talking about when we say price) not seeing $120 over here but Indeed! You were right! I underestimated the short term likelihood we’d see $100 break. I thought we’d stay in nineties after spending most the last year in sixties. Will be interesting watching this thing recalculate after the conflict. Personally seems like this is an attack on China that was planned to extreme by US. Very interesting times we live in no doubt! And I underestimated the possibility of $100 so fast. I suspect we will be far lower a year from now though. We shall see, but I believe this is a short term spike that settles down within a couple months.
I think it’s an overreaction but doesn’t change where it is for now. You called it!
I know nothing about oil supplies or oil prices. I know what I read in the papers. However, another blogger, azircon, who is a geologist and works in the oil and gas industry, writes that countries have large oil reserves. He does not see a rational reason for a spike in prices. What am I to think? My gut tells me prices will go up, but my gut certainly does not serve me well when it comes to predicting world events, or prices.
Here are his two most recent blogs on the oil situation.
https://peakd.com/hive-180505/@azircon/strait-of-hormuz-its-importance-in-energy-transportation (three days ago)
https://peakd.com/hive-180505/@azircon/traffic-through-me (today)
Yes, the countries have big reserves, but the price is determined by the supply, meaning how much they drill and sell. Right now, Iran is attacking oil drill sites in all of the Persian Gulf countries. The Strait of Hormuz is under a blockade, so ships with oil cannot pass, or they have to make a longer trip. For a ship to get insured, the price has gone 12X from a week ago. China and India buy its oil from Iran somewhere like 20-30%, and now Iran cannot supply that oil, so they will have to buy it from someone else, so less supply, higher prices. If the war ends soon, then the prices will stabilize and soon return to lower levels.
Straits matter more now