TD Securities’ commodities team says extended disruption in the Persian Gulf, with blocked flows through the Strait of Hormuz, could push oil prices higher. It adds that supply conditions for crude oil, petroleum products and LNG could tighten while the route remains frozen.
The team expects production to weaken and inventories to fall if the blockage continues. It says these factors could keep energy prices rising if the conflict lasts longer than expected.
Potential Price Surge Scenario
It estimates prices could jump by $50 or more if the conflict is not resolved in the coming weeks. It also projects that, even if fighting ends soon, prices could stay high due to deficits and low inventories.
The team forecasts $90–100 crude could continue well into 2027. It notes that countries such as China and Japan may seek to rebuild inventories quickly.
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Given the prolonged conflict in the Persian Gulf, we believe the path of least resistance for oil prices is sharply higher. With flows through the Strait of Hormuz down nearly 80% since the blockades began in late 2025, the market is being starved of millions of barrels per day. This ongoing supply shock suggests that the recent surge in energy prices has much further to run.
Risk Management And Volatility Outlook
Traders should consider positioning for another significant move upward in the coming weeks. We see a strong case for buying crude oil futures and call options, as a price surge of $50 or more is a distinct possibility if the situation does not de-escalate. This scenario is reminiscent of the market reaction we saw in 2022 after Russian supplies were disrupted, which pushed Brent crude briefly over $130 per barrel.
The supply crisis is made worse by critically low global inventories, which provide no buffer. The latest March 2026 report from the Energy Information Administration showed US strategic reserves are at a 50-year low, a situation mirrored across most of the OECD. Consequently, any resolution would likely trigger a massive restocking effort from countries like Japan and China, underpinning high prices.
Even if a ceasefire were announced tomorrow, we would advise against taking significant short positions. The damage to production infrastructure and the time required to refill the supply chain means deficits will persist well into 2027. We see a new floor for crude oil prices forming in the $90–$100 per barrel range for the foreseeable future.
The extreme uncertainty will keep volatility elevated, making options a valuable tool for managing risk and capturing upside. The Cboe Crude Oil Volatility Index (OVX) has been consistently trading above 45, levels not sustained since the initial shock of the conflict last year. This environment favors strategies that benefit from large price swings, but the primary risk remains skewed towards a sudden and dramatic price spike.
