Oil Expert on How Far Prices Could Fall as Strait of Hormuz Re-opens

Oil’s panic trade may be breaking faster than it began.

After fears that Iran’s closure of the Strait of Hormuz could send crude spiraling toward a full-blown supply shock, prices are now pulling back as the first tanker makes it through the waterway — raising a new question for markets: not how high oil can still go, but how far it could fall if the nightmare scenario is already starting to unwind.

But that doesn't mean oil is suddenly back to normal. Brent crude prices still held above $100 a barrel to start the week.

For the third week in a row, veteran oil trader Stephen Schork joined Coinage to pour some cold water on the cleanest bullish or bearish narratives. His point was simple: traders staring only at Brent or WTI may be missing the much uglier story underneath.

“I guess it depends on your definition of what normal is, right? So no, I don’t think we’re at normal right now,” Schork said. His argument is that traders looking only at Brent are missing the bigger story: the Atlantic basin still has oil, especially with Strategic Petroleum Reserve releases adding more barrels, but Asia is still badly short. That’s why he said the market to watch isn’t just Brent or WTI — it’s Dubai crude, which he said is still trading around $130 a barrel, or roughly a $30 premium to Brent when it normally trades at a discount.

But oil prices retreated from recent highs of $105 on Monday as a Pakistani tanker made its way through the Strait, encouraging traders in what could be the first sign that oil shipments might be shifting in the right direction. And that is where his downside roadmap becomes especially important.

Schork argued that the first key level to watch is not some dramatic crash back to pre-war pricing, but a much more incremental technical and psychological shift lower.

“If we break that $99 level in Brent, that will be our first telltale that something material is changing, changing for the positive,” he said.

From there, his base case for a more normal market sits around $92 to $93 a barrel. That is roughly where he said his pre-crisis modeling had Brent pegged before the latest war-driven spike distorted everything. If the geopolitical backdrop continues improving, he sees a path down to $86. And if the market truly starts pricing a durable end to the crisis — not just safer shipping lanes, but a broader resolution that restores more barrels to market — then oil could eventually work its way back into the $70 range where it traded before all this began.

Schork made clear that what happens next depends on what kind of resolution is actually taking shape. A temporary de-escalation is one thing. A genuine political endgame inside Iran is another. He pointed to prior templates — including the post-Kuwait correction and last year’s shorter conflict-driven retracement — as examples of how quickly oil can reverse when headline risk breaks the other way. Markets, after all, do not just rise violently on fear. They can fall violently on relief too.

That is especially true in oil, where overshoots are often the rule, not the exception.

“Markets that overshoot in one direction based on a headline, when that headline changes, the market… reverses quickly and you tend to get an overshoot” in the other direction Schork said

That may be the most important point for non-energy traders trying to make sense of this moment. The question is no longer just how high oil could go if the Middle East conflict worsens. It is also how fast crude could unwind if the market decides the nightmare scenario is off the table.

And yet, even Schork’s more bearish path does not assume a clean snapback overnight. Timing matters. Infrastructure matters. Regional pricing still matters. Asia’s shortage matters. A market can be less panicked and still be deeply dislocated at the same time. That is the strange middle ground oil appears to be trading in now: no longer pricing outright catastrophe, but not yet pricing true normalcy either.

For now, the reopening of the Strait of Hormuz is not the all-clear. It is the first real evidence that oil traders may finally have permission to imagine the downside again. And if Schork is right, the next big move in crude may not be another spike higher — but a steady, then suddenly sharp, retracement lower.

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