In our April 19, 2026 WCTW report titled, “The Oil Market Breaking Point Is Here.” We said:
If the Strait of Hormuz opens after April, we cannot provide an accurate oil price forecast. We will have crossed too deep into the Rubicon. This will have been the largest oil supply outage in the history of the oil market by a magnitude of 4x. Fundamental market theories will no longer apply here because there’s no price for outright shortages. When a market runs out of fuel, it just runs out.
Over the coming weeks, if the Strait of Hormuz remains closed, sell-side analysts will try very hard to “forecast” an oil price only to fall short initially. As I’ve explained before, there’s no historical precedent for what we are witnessing in the market today. The only way to offset the supply loss of ~11 to ~13 million b/d is through COVID-like mandated lockdowns.
Outside of government-mandated lockdowns, market-led demand destruction of this magnitude has never occurred. Even during the Great Financial Crisis of 2008, we did not see demand destruction anywhere near ~12% of global demand. The only relevant timeframe was from 1980 to 1983, when global oil demand fell by 10%, but that was over 3 years. This time requires an instantaneous rebalancing to prevent oil inventories from hitting the tank bottom.
Again, no one, especially not us, can provide you with an accurate oil price forecast. Instead, I will walk you through the logistical roadmap of what I see happening.
Roadmap
We are already past the oil market breaking point. As we explained in our initial oil market breaking point article, cumulative storage lost (including reopening) is now 1.2 billion bbls.
From here on out, oil market will follow the logic I explain below: