Where are crude prices headed?

Key takeaways:

• The market impact is showing first through higher prices and greater uncertainty, while actual production across most Gulf producers is still continuing.

• The central challenge is how to guarantee safe passage through the Strait of Hormuz while conflict and instability persist.

• Saudi Arabia and the UAE have alternative pipeline routes that can ease pressure, but redirecting crude will take time and still carries risk.

• Storage across Gulf producers can temporarily absorb production, but it is unevenly distributed and already appears to be more limited in some countries such as Iraq.

• Triple digit oil prices would require a much more severe physical disruption, such as major damage to shipping flows through the Strait.

• Global oil market fundamentals remain relatively comfortable, with supply still outpacing demand and inventories high in key markets, especially China.

• The countries most exposed to prolonged disruption are those highly dependent on imported crude and LNG, including India, Bangladesh, Pakistan, Japan, and South Korea.

• The greater risk may come through the wider economy, as inflation fears, volatile financial markets, and weaker confidence amplify the shock beyond energy alone.

• Strategic and commercial storage in the Gulf, China, the US, and IEA countries provides an important cushion against an immediate direct supply hit.

• For now, the situation remains highly fluid, which makes precise oil price forecasts less useful than tracking the physical and economic consequences of disruption.