- The conflict in the Middle East has altered the dynamics of the oil market.
- The longer the Strait of Hormuz remains blocked, the higher the risks of a Brent rally.
Don’t expect things to return to normal. Before the conflict in the Middle East, the oil market was in the hands of the bears. Demand was falling due to the shift towards alternative energy sources, whilst supply was rising. OPEC+ was gradually increasing production to avoid losing market share and investors were talking about a record surplus. Today, the IEA estimates the loss of supply at 12 million barrels per day, which is more than during the Arab oil embargo of 1973–1974 and the Iranian Revolution of 1978–1979 combined. However, it would be rather naive to think that the end of the war will cause prices to plummet.
Even after the Strait of Hormuz reopens, it will take months to restore production in the damaged energy infrastructure of the Persian Gulf. At the same time, countries are seriously concerned about energy security and will work hard to boost oil demand. Interestingly, the current decline in demand is preventing Brent from soaring too high.
Vitol, a crude oil trader, estimates a demand loss of around 4 million barrels per day due to excessively high prices. If we add Saudi Arabia’s workarounds, the increase in US crude exports, and active purchases by China and India of Russian barrels stranded at sea, then the stabilisation of Brent near $100 starts to look logical. The math suggests that the actual deficit is closer to 5% than 10%.
The problem is that the crude on Russian tankers at sea is running out, the US’s ability to ramp up supply is limited by existing infrastructure, and a resumption of fire in the Middle East could lead to the Houthis blocking Saudi Arabia’s alternative routes. With this background, Citi’s forecast of Brent rising to $110 a barrel should the Strait of Hormuz be blocked for another month will seem far too modest.
The longer the US and Iran delay reaching a peace agreement, the more devastating the oil crisis risks being for the global economy. However, optimism has not yet faded. Investors are operating on the assumption that ‘it could be worse’. A fragile peace in the form of an indefinite ceasefire is better than war. The transit fee paid to Iran is seen as compensation for the bombing of its territory.
Editorial note: This recovered market brief has been cleaned and reclassified by Next Move Markets for educational market intelligence. It is not investment advice.
Next Move Markets desk view
For active traders, this brief should be read through the lens of energy markets rather than as a standalone headline. The key question is whether the theme behind Bulls Control Crude Oil can influence positioning beyond the first reaction. That means watching supply headlines, inventory data, OPEC policy, transport routes and geopolitical risk together, not in isolation.
A richer trading read comes from separating the catalyst from confirmation. The catalyst explains why markets are paying attention; confirmation comes from price action, liquidity and cross-asset behavior after the headline is digested. If those signals do not align, traders should treat the move as fragile and keep risk tighter.
What traders should watch next
- Whether the headline changes physical supply expectations or only short-term sentiment.
- How Brent and WTI react around recent technical ranges after the first volatility spike.
- Inventory data, OPEC communication and shipping-route risk that can confirm the theme.
- Currency moves and global growth expectations that may offset energy-specific catalysts.
Risk context
This article is a market-intelligence brief, not a trade recommendation. Before acting on the theme, traders should define invalidation, position size and the time horizon of the setup. The same headline can support a short-term reaction and still fail as a multi-session trend if liquidity, policy expectations or broader sentiment move the other way.
Scenario map
The base case is that traders keep this theme on the radar while waiting for confirmation from supply headlines, inventory data, OPEC policy, transport routes and geopolitical risk. A stronger continuation scenario requires follow-through after the first reaction, preferably with related assets moving in the same direction. A failure scenario develops if the headline is quickly absorbed, volatility fades and price returns inside the previous range.
For energy markets, the most useful approach is to compare the article theme with live market behavior. If the market confirms the narrative, pullbacks can become more constructive. If the market rejects it, the headline becomes background noise rather than a trading driver.
Execution discipline
- Define the level first: traders should know where the idea is invalidated before thinking about upside or downside.
- Separate news from setup: Bulls Control Crude Oil may explain attention, but entry quality still depends on timing, liquidity and risk/reward.
- Watch confirmation: a clean move usually appears across related markets, not only in one isolated instrument.
- Control exposure: if volatility expands, smaller position sizing can be more professional than chasing the headline.
Next Move Markets treats this kind of brief as a starting point for preparation: identify the driver, map the scenarios, then wait for the market to prove which path is actually being priced.
