The International Energy Agency (IEA) has declared the closure of the Strait of Hormuz, amid an Iran conflict, as the largest energy security threat in history.
Despite the potential for a severe supply disruption, traders are not pricing in significant crude oil price hikes. Prediction markets show a less than 1% probability that WTI Crude Oil will reach $160 per barrel in April.
The closure threatens to remove 13 million barrels of oil per day from global supply, a scale exceeding all previous oil crises. The low market odds suggest traders anticipate either a swift de-escalation of the conflict or increased production from OPEC+ to stabilize prices.
Key factors to monitor include US-Iran diplomatic developments and OPEC+ production announcements. Any de-escalation or coordinated output increase could decrease the likelihood of a price surge, while further escalation might drive prices higher.