Oil Price Forecast (BZ=F / CL=F): Brent Hits $119, Brent-WTI Spread at 11-Year High

Oil Price Forecast (BZ=F / CL=F): Brent at $110-$119, the Strait of Hormuz Half-Closed, and Why $150 Is Not the Ceiling

The Numbers That Define the Biggest Supply Shock in a Generation

Brent (BZ=F) at $110.50, WTI (CL=F) at $99.22 — Up 60% Since the War Began

Brent crude (BZ=F) is trading at $110.50 per barrel Thursday, up $3.11 or 2.90% on the session, after briefly surging to $119.11 overnight — the highest intraday print since oil markets absorbed the initial shock of Russia's 2022 Ukraine invasion. WTI (CL=F) sits at $99.22, up $2.90 or 3.01%, with the Brent-WTI spread blowing out to its widest level in 11 years as the international supply disruption story runs dramatically hotter than the domestic one. By 9:15 a.m. ET Thursday, Fortune's benchmark reading had Brent (BZ=F) at $113.71 per barrel — up $4.93 from Wednesday morning's $108.78 and more than $42 above its price one year ago at $70.99. The one-month comparison is even more staggering: oil sat at $70.37 per barrel one month ago. It is now $110 to $114. That is a 61.58% increase in 30 days — the fastest sustained oil price acceleration since the 1973 Arab oil embargo.

Pull back to the conflict's starting point and the full scale of the move becomes clear. Markets began pricing in a war risk premium approximately two weeks before hostilities formally erupted on February 28, 2026. From that pre-conflict baseline, Brent (BZ=F) is now up approximately 60% — a move that, by the analytical framework developed by Brookings Senior Fellow Robin J. Brooks using established demand elasticity models, implies the market is currently pricing a scenario where approximately half of all oil exports out of the Persian Gulf are permanently disrupted. Saudi Arabia's exports are running at roughly seven million barrels per day — about half their pre-war capacity. Factor in Iran's two million barrels per day still moving plus a gradual recovery in other regional traffic, and total flow through the Strait sits near ten million barrels per day against the pre-conflict level of approximately 20 million. That is half the Strait's prior capacity. That is what Brent at $110 is pricing. Not $150. Not $200. Half-capacity disruption. The market has already done the math.

Other benchmark prices confirm the breadth of the shock. Murban crude is at $123.30, up 5.57%. The OPEC Basket sits at $135.10, up $2.19 or 1.65%. Louisiana Light is at $98.51, up 3.81%. Mars crude at $119.30, up 2.65%. Natural gas at $3.175 per million BTU, up 3.59%. Gasoline at $3.162 per gallon at the wholesale level — translating to $3.88 at the retail pump per AAA data, the highest U.S. consumer gas price since 2022's inflationary shock, up from $2.93 just one month ago.

The Ras Laffan Strike — 12.8 Million Tons of LNG Sidelined for 3 to 5 Years

The single most consequential event in Thursday's oil and gas market is not the Brent price itself — it is the confirmed "extensive damage" to QatarEnergy's Ras Laffan industrial complex, the world's largest liquefied natural gas export facility. QatarEnergy CEO Saad al-Kaabi told Reuters directly that the required repairs will sideline 12.8 million tons of LNG production for three to five years. Qatar produces approximately one-fifth of the world's LNG supply. The Ras Laffan facility accounts for the majority of that production. Three to five years of disruption to 12.8 million tons of annual capacity is not a temporary supply squeeze — it is a structural reshaping of global LNG markets for the better part of a decade.

QatarEnergy has already declared force majeure on LNG shipments once since the conflict began in early March. The CEO indicated Thursday it may have to do so again — potentially for up to five years. Force majeure is the contractual mechanism that releases the company from liability for failure to supply due to events outside its control. For the buyers of Qatari LNG — which include Japan, South Korea, China, India, and virtually every major European energy company — this is not a supply disruption that gets resolved by a ceasefire. The physical infrastructure has been damaged. Matthieu Favas, commodities editor at The Economist, stated on the BBC's Today programme that the facility provides "a fifth of global LNG supply" and that the attack makes a quick restart "clear that this is unlikely to happen" — estimating months at minimum, consistent with the CEO's three to five year repair assessment.

The sequence of strikes that produced this outcome is worth laying out precisely. Wednesday evening, Israel hit Iran's South Pars gas field — the Iranian section of the largest natural gas reserve on earth, which Iran shares with Qatar under the name North Dome. Iran responded by publishing a target list of regional energy infrastructure and ordering evacuations, then executing strikes on Ras Laffan, the Saudi Samref refinery at Yanbu on the Red Sea coast, UAE Shah gas field facilities, and two Kuwaiti refineries. Iran simultaneously suspended gas exports to Iraq to preserve domestic supply — a country where 94% of total gas production is consumed internally according to Gas Exporting Countries Forum data. The UAE halted Shah gas field operations after Iranian drone strikes. The Samref refinery attack at Yanbu resulted in "minor impact" per initial reports. The UAE port of Fujairah — a critical alternative routing point for Gulf energy when Hormuz is restricted — had also been targeted in prior days.

The Brent-WTI Spread at an 11-Year High — What the Divergence Is Telling Markets

The spread between Brent (BZ=F) and WTI (CL=F) has blown out to its widest level in 11 years — currently running at approximately $11.28 per barrel. That divergence is not an arbitrage opportunity. It is a signal about the geographic concentration of supply disruption risk. WTI (CL=F) represents North American production, which is largely insulated from Middle East supply chain disruption. U.S. shale production continues unimpeded, domestic pipelines are operational, and Gulf Coast refinery throughput has not been materially affected. Brent (BZ=F) represents the international benchmark — the price of oil that reflects disruption to Persian Gulf exports, Strait of Hormuz transit, and European LNG supply chains. When those two benchmarks diverge by 11 years' worth of spread, the market is communicating that the international supply shock is severe and that U.S. domestic production cannot compensate for Persian Gulf disruption at current margins.

Asia has responded to this dynamic predictably. Japan's Jera — one of the world's largest LNG buyers — sees the war pushing LNG buyers toward U.S. and Canadian supply. Asian refiners are turning to U.S. oil as the Middle East choke point bites. Thailand has shifted purchasing toward Russian crude. China, which built a massive strategic oil buffer ahead of the crisis, is drawing on those reserves rather than competing for spot cargoes. Asian imports of Russian fuel oil are set to hit a record high. The trade flow reorganization that is occurring across global energy markets in real time is the medium-term consequence of Strait of Hormuz disruption — and it is one that makes restoring the pre-war supply equilibrium enormously difficult even after a ceasefire, because buyers will have restructured their supply chains toward alternative sources.

Only 90 Ships Have Crossed Hormuz Since the War Began — The Math on 20 Million Barrels Per Day

The Strait of Hormuz is the single most consequential chokepoint in global energy infrastructure. Before the conflict, approximately 20 million barrels per day transited through it — roughly 20% of total global oil consumption of 100 million barrels per day. Since February 28, only 90 ships have crossed Hormuz in total across the entire conflict duration. Pre-war, approximately 20 to 25 tankers per day transited the strait in each direction. The closure is not technical — it is operational. The Strait remains physically navigable for Iranian vessels, but commercial tankers face insurance cancellations, crew safety concerns, and explicit military risk. The result is a near-complete shutdown of commercial tanker transit, with only Iranian cargoes moving through reliably.

The pipeline and alternative routing alternatives are limited. Saudi Arabia's East-West Pipeline, which can move approximately 5 million barrels per day to Red Sea terminals, has been partially operational — but the Samref refinery at Yanbu, which is a critical Red Sea processing point, was struck Thursday. Saudi Red Sea oil exports have reportedly jumped to nearly 4 million barrels per day as the kingdom maximizes alternative routing capacity, but that still leaves 16 million barrels per day of pre-war Hormuz transit capacity without a clear alternative path to global markets. The arithmetic of the supply shock is not complicated — it is simply enormous.

The $150 Oil Scenario — Kpler's Warning and the Elasticity Framework

Kpler: $150+ Per Barrel If War Extends Through End of March

Kpler's Head of Middle East and OPEC+ Insights Amena Bakr told CNBC International on Thursday: "With this huge outage of supply it is just a matter of time where prices really catch up with the fundamentals here." Kpler's scenario analysis places Brent (BZ=F) at $150 per barrel or more if the conflict continues through the end of March — a 36% increase from Thursday's $110.50 level. The forecaster community has been discussing $200 per barrel for over a week, even before Iran issued explicit threats about oil prices reaching that level amid escalating attacks.

The academic elasticity framework provides a disciplined way to assess those extreme scenarios rather than accepting or rejecting them based on headlines. Using a demand elasticity of 0.15 — the working estimate employed by Robin J. Brooks and Ben Harris at Brookings — a 60% to 70% rise in oil prices is consistent with Persian Gulf export capacity being cut in half. At the current level of approximately half-capacity disruption, Brent at $110 is within the model's predicted range for exactly that scenario. For Brent (BZ=F) to reach $150, you would need either a further reduction in Hormuz throughput toward 20% to 25% of normal capacity, or a significant extension in the duration of the current disruption that causes demand destruction to exceed supply reduction and then reverses. For $200 — a 190% increase from the pre-war price — the elasticity models don't reach that level even under the most extreme assumptions about Hormuz closure combined with the lowest demand elasticity estimates.

The practical implication: Brent at $119 intraday was approaching the upper bound of what the current level of supply disruption can rationally support. The retreat to $110 to $113 range reflects the market absorbing the war premium as incremental rather than escalatory in that precise session. Every new attack that confirms existing disruption doesn't add to the price — it is already priced. New attacks that create new disruption capacity — striking Saudi Red Sea terminals that were serving as alternative routing, or causing additional Ras Laffan damage that extends the LNG outage beyond 3 to 5 years — would generate fresh upward moves. The marginal price driver is now the marginal supply destruction, not the conflict's existence.

The Caldara-Helmi Elasticity Range — How the Models Map to Specific Oil Price Outcomes

The supply disruption math requires being specific about elasticity assumptions. Caldara et al. (2019) estimate the short-run price elasticity of oil demand at 0.14. Helmi et al. (2024) put it at 0.18. The Wolfram-Johnson-Rachel framework from December 2022 used 0.10. The Brooks-Harris working assumption is 0.15. The price impact formula is straightforward: (supply disruption as percentage of global supply) divided by (elasticity) equals the required percentage price increase for the market to clear. At 0.15 elasticity with half of Persian Gulf capacity disrupted — approximately 10 million barrels per day out of the 20 million that previously moved through Hormuz, representing 10% of global consumption — the implied price rise is 10%/0.15 = 67%. Applied to the pre-conflict Brent price of approximately $70, that 67% increase produces a $116 target — remarkably close to where BZ=F has been trading.

What would produce $150? Using 0.15 elasticity, reaching $150 from $70 requires a 114% price increase, which implies a supply disruption of approximately 17% of global consumption — meaning roughly 17 million barrels per day disappearing from markets. The current disruption is approximately 10 million. Getting from 10 million to 17 million barrels per day of additional disruption would require near-complete Hormuz closure plus the loss of Saudi Red Sea alternative routing capacity. The Samref attack Thursday creates risk of exactly that scenario emerging — but "minor impact" from that strike suggests the Red Sea corridor remains functional for now.

The SPR Response and the Iranian Sanctions Question — Washington's Pressure-Relief Options

140 Million Barrels of Iranian Oil at Sea, 400 Million From IEA Members — The Supply-Side Math

Treasury Secretary Scott Bessent announced Thursday that the U.S. is considering lifting sanctions on Iranian oil already at sea — approximately 140 million barrels that had been heading primarily to China. At 100 million barrels per day of global consumption, 140 million barrels represents roughly 1.4 days of global supply. Releasing it to global markets would provide temporary price relief but does not address the structural supply disruption created by Hormuz closure and Ras Laffan damage. The U.S. has already pledged 172 million barrels from the Strategic Petroleum Reserve as part of the IEA's 400-million-barrel coordinated release commitment. Japan has signaled potential participation in additional releases.

The Kiel Institute's Lena Dräger explicitly compared the current oil shock to Russia's 2022 Ukraine invasion — noting that oil has risen to over $100 per barrel in both cases — while observing a key structural difference: in 2022, the ECB was constrained by forward guidance that delayed its policy response. Today, with rates already in the neutral zone at 2.0%, the ECB has more flexibility. The practical implication for oil markets is that European central bank hawkishness, driven by oil-shock inflation, will likely suppress European economic growth — which reduces oil demand and provides a partial demand-side offset to the supply shock. This is not a bullish outcome for oil in the medium term. It is one of the mechanisms by which extreme oil prices eventually produce their own correction.

Nick Butler, former head of strategy at BP, captured the broader strategic risk on the BBC's Today programme: "The market is expecting things to get worse. In their view, Mr. Trump has opened a Pandora's box, and he's lost control of what is happening day-to-day in the region." Butler's assessment of the LNG situation was direct: the gas in Ras Laffan "can't be substituted very quickly at all, and maybe not for a very long time" — an expert validation of the 3 to 5 year repair timeline the QatarEnergy CEO outlined.

The Brooks framework offers a geopolitical optionality argument: as oil prices rise, the incentive for a diplomatic resolution — what he calls a "Trump TACO" — increases. The risk calculation for the U.S. changes materially as gas prices push past $4 per gallon toward the levels that historically damage presidential approval ratings. Brooks argues that an embargo of Iranian oil coupled with a naval blockade of Iranian ports could starve the regime of hard currency inflows and accelerate the Strait's reopening more effectively than continued military strikes — a strategic argument that, if adopted, would represent a meaningful change in the conflict's economic trajectory.

European Natural Gas at a 3-Year High — Dutch TTF Up 24%, UK Gas at 157p Per Therm

The LNG disruption has hit European gas markets harder than crude, reflecting Europe's structural dependence on Qatari LNG for supply system balancing. Dutch TTF natural gas futures — the European benchmark — surged 24% to 68.22 euros per megawatt-hour Thursday. UK gas prices hit 157p per therm Thursday, a 13% spike, having touched nearly 183p earlier in the session — more than double the level seen before the conflict began. European natural gas prices have hit a three-year high, per Matthieu Favas, as QatarEnergy's force majeure scenarios play out. The European Commission sourced approximately 20% of its LNG from Qatar before the war — that 20% of the market's balancing cargo is now effectively gone for years, not weeks.

The transmission mechanism from European gas prices to inflation is direct and fast. Higher natural gas prices raise electricity generation costs, industrial input costs, and household heating bills simultaneously. The ECB's own staff forecast revised 2026 Eurozone inflation from 1.9% to 2.6% this week — and that revision was made with oil already at $110. If Brent (BZ=F) holds above $110 for the remainder of Q1 and into Q2, the next ECB forecast revision will push inflation expectations higher again, and the rate hike discussions that began Thursday will accelerate. The oil price is not just an energy market event — it is the primary driver of every central bank's inflation projection for the next 12 months.

India, Asia, and the Global Supply Chain Reorganization

Asian Imports of Russian Fuel Oil at Record Highs, India's Refiners Suspending Fuel Credit

The secondary shock effects of the oil price surge are propagating through emerging market energy systems in ways that do not show up in Brent (BZ=F) or WTI (CL=F) spot prices but will become economically significant within weeks. India's top refiners have suspended fuel credit to distributors as the oil price shock strains working capital. The country's piped gas network faces pressure as LNG alternatives to Iranian supply become scarce and expensive. Thailand has shifted purchasing entirely toward Russian crude — a trade flow that represents sanctions arbitrage, buying discounted Russian barrels to avoid the higher Brent market prices. Chinese oil giants have returned to Russian crude purchasing after the U.S. granted a sanctions waiver on Russian oil, having built a massive strategic oil buffer before the crisis that is now being drawn down. Asian refiners broadly are turning to U.S. oil exports to replace Middle East supply — a structural shift that benefits U.S. Gulf Coast producers and LNG exporters at the expense of OPEC+ market share.

Japan's Jera, one of the world's largest power generators and LNG buyers, is explicitly steering new LNG procurement toward U.S. and Canadian supply — a permanent supply chain realignment that will outlast the conflict regardless of how it resolves. India's solar power quadrupling plan, announced Thursday, represents the longer-term demand-side response to repeated energy shocks — but reducing fossil fuel demand by building solar capacity is a multi-year process that provides zero relief to $110 Brent in 2026.

Iraq and Kurdistan have struck a deal to restart a key oil pipeline — a marginal positive for global supply that adds some barrels to a market desperately short of them. Norway's Equinor made an oil discovery near a large Arctic field — again, marginal near-term supply contribution, but reflective of the accelerating global search for non-Gulf supply sources. Libya's Sharara field fire triggered a supply flow reroute. The global oil market is being actively restructured in real time as every producing nation and consuming nation simultaneously adjusts to a world where 10 million barrels per day of Persian Gulf supply has been removed from available flow.

U.S. Diesel Above $5 Per Gallon — The Inflation Transmission Is Already Happening

U.S. diesel prices crossed $5 per gallon as the Hormuz crisis ripples through domestic fuel markets. U.S. gasoline averaged $3.88 per gallon on Thursday per AAA — up from $2.93 just one month ago. The "rockets and feathers" dynamic that governs retail fuel pricing means gasoline at the pump reflects crude oil increases within days, while decreases come much more slowly. With WTI (CL=F) at $99 and Brent (BZ=F) at $110 to $113, the retail gasoline level at $3.88 has further to go if crude holds these levels — $4.00 to $4.25 is a realistic near-term outcome even without additional escalation, and that level has historically triggered both consumer behavioral changes and significant political pressure on the White House to act more aggressively on supply-side relief.

The White House has suspended the Jones Act for 60 days — a move analysts assess will reduce gas prices by approximately 3 cents per gallon — and Germany has moved to cap fuel price hikes as the war drives consumer costs higher. The U.S. has released oil from the Strategic Petroleum Reserve as part of the IEA's 400-million-barrel commitment, with Japan potentially participating in additional releases. Despite these coordinated efforts, Brent (BZ=F) has moved from $70 to $110 to $119 intraday and back to $110 — reflecting that SPR releases and Jones Act suspensions are rounding errors against a 10-million-barrel-per-day supply disruption that has no near-term resolution mechanism.

The Federal Reserve's response — holding rates at 3.50% to 3.75% while raising the 2026 inflation forecast from 2.4% to 2.7% and signaling cuts are pushed to 2027 — is itself a function of BZ=F and CL=F at current levels. The Fed cannot cut into oil-driven inflation without risking entrenching inflationary expectations. It cannot hike into a slowing economy without risking a recession. Oil prices above $100 have historically produced stagflation scenarios — 1973, 1979, 1990, 2008 — and the current setup has all the architectural features of those episodes. The ECB's Kiel Institute advisor Lena Dräger explicitly warned Thursday that the "real monetary policy challenge" is preventing oil price increases from seeping into wages and prices through second-round effects — precisely the 2022 replay risk that every central banker is trying to avoid.

OPEC+ Cohesion and the Sanctions Calculus — Will the Alliance Hold

Kpler: OPEC+ Likely to Survive Intact Despite Member Conflict

Amena Bakr at Kpler noted that despite the conflict involving Iran and allied Gulf states as targets, the OPEC+ alliance is "likely to survive as-is" — citing historical precedent for OPEC maintaining cohesion during prior conflicts between members. Saudi Arabia has maximized Red Sea export routing to nearly 4 million barrels per day while simultaneously being targeted by Iranian drone strikes on its Yanbu facilities. The kingdom is attempting to thread the needle of supplying global markets through alternative routing while existing within a fragile regional security environment. That tension — between economic imperative and geopolitical exposure — will define Saudi Arabia's behavior over the coming weeks.

Russia's position is paradoxically strengthened by the conflict. Asian imports of Russian fuel oil are at record highs as buyers substitute away from Persian Gulf sources. China, Thailand, and India are all turning toward Russian crude. The U.S. sanctions waiver on Russian oil — designed to release additional supply to combat the Hormuz shock — has the side effect of providing Russia with expanded market access and improved terms on its crude sales to Asia. The geopolitical irony of a U.S. war against Iran inadvertently improving Russia's energy revenue position is not lost on the market.

The Price Verdict — Buy Energy Equities, Not Spot Crude at $110

Brent (BZ=F) at $110-$113 Is Already Pricing Half-Capacity Hormuz Disruption — Upside Is Narrowing

The analytical framework is clear: Brent (BZ=F) at $110 to $113 is pricing approximately half of Persian Gulf export capacity being disrupted on a sustained basis. That scenario is currently reality — 90 ships in total have crossed Hormuz since February 28, against a pre-war rate of 40 to 50 per day. The market is not underpricing the supply disruption that exists today. The price could go higher — Kpler's $150 scenario is plausible if the conflict extends into April with no diplomatic progress and the Samref refinery damage proves more significant than initially reported — but the easy money in long crude has already been made for those who positioned before the war. From $70 pre-war to $110 to $113 is a 57% to 62% gain. Adding long crude exposure at $110 requires a view that the conflict escalates materially further — meaning the Strait moves from half-capacity to near-complete closure, or that Saudi Red Sea routing is successfully disrupted.

The more attractive positioning in this environment is long energy equities — companies with domestic U.S. production that benefit from elevated WTI (CL=F) prices above $95 without exposure to the Hormuz geographic risk. U.S. Gulf Coast LNG exporters are particularly well-positioned as Japan's Jera and other Asian buyers redirect procurement. The energy sector of the S&P 500 (SP500.10) was the only sector trading positive Thursday — up 1.41% — confirming that institutional capital has already made this rotation. Natural gas producers with domestic U.S. exposure benefit from the European LNG supply squeeze driving demand for U.S. LNG exports. These are the buy positions. Spot crude at $110 with the diplomatic optionality that Brooks identifies as increasingly likely — a Trump TACO, an Iranian sanctions deal releasing 140 million barrels, or an Iranian regime-change scenario that reopens Hormuz — carries meaningful downside risk. The conflict de-escalation trade in crude could be as violent as the escalation trade has been. Position accordingly.

That's TradingNEWS