Oil Expert Says Trump’s Iran Blockade Could Backfire to Send Prices Higher

Oil markets may be sending the wrong signal — and according to one veteran trader, that disconnect could be setting up the next leg higher.

Crude prices were hovering just above $100 a barrel as President Trump announced the beginning of the U.S. blockade in the Strait of Hormuz. Many investors have taken comfort in the idea that the worst of the shock may already be priced in, but beneath the surface, the physical market is telling a very different story.

Stephen Schork, Principal of the Schork Group, says that gap — between what traders see on screens and what’s happening in the real world — is exactly where risk is building.

“The thing that has surprised me the most at this point is the absolute disconnect between the physical price of oil… and the futures price of oil,” Schork told Coinage in a new interview. "There's a massive distortion there ... our demand elasticity from an economic standpoint is now measured in weeks of how long we could sustain this, as opposed to months."

That divergence comes at a moment when President Donald Trump is attempting to weaponize U.S. energy dominance, pitching the blockade as a way to force global buyers toward American crude. But Schork argues the policy may have the opposite effect — accelerating demand and pushing prices even higher.

“Listen to what the president is saying… come and take our oil,” Schork said. “What happens when you increase demand for oil? Oil prices go up.”

The reality is already starting to show up in markets. Oil surged more than 7% after the blockade was announced, pushing crude back above $100 a barrel amid fears of prolonged disruption to global supply chains. And while futures markets have stabilized, physical barrels — the oil actually being delivered — are trading closer to $150 in some regions, highlighting the strain on real-world supply.

That’s because the Strait of Hormuz isn’t just another shipping lane — it’s the artery of the global energy system, responsible for roughly 20% of the world’s oil flows. Any disruption doesn’t just raise prices — it forces a global reshuffling of supply. And that reshuffling comes with costs.

Tankers now face longer routes. Insurance premiums are rising. And buyers in Europe and Asia are effectively bidding against each other for the cheapest available barrels — many of which now come from the United States. But even that solution has limits.

“The United States is the largest producer of oil… but can the world use our oil?” Schork said. “It’s not a question of quantity. It’s quality.”

Much of U.S. crude is lighter and requires different refining configurations than the heavier grades many global refineries are built to process. That mismatch means even as demand for U.S. oil surges, it can’t fully replace disrupted Middle Eastern supply — tightening markets further.

Shipping bottlenecks are removing tanker capacity from the market. Alternative routes around Africa or through the Panama Canal add time and cost. And multiple geopolitical choke points — from Hormuz to the Red Sea — are compounding the strain.

“There are options,” Schork said. “But you’re going to have to make the price high enough to realize those options.”

And if supply can’t adjust fast enough, there’s only one other way the system resets.

“The only other way is you have to kill demand,” Schork said.

Governments are already trying to soften the blow — with fuel tax holidays and other measures aimed at shielding consumers. But those policies may delay the inevitable. If demand remains artificially strong while supply stays constrained, the adjustment doesn’t disappear — it just gets pushed into the broader economy.

“The market’s going to solve that through economic contraction,” Schork warned.

Airlines are already cutting flights. Fuel costs are climbing. And ripple effects are spreading beyond oil into natural gas, fertilizers, and even food production — all of which depend on the same disrupted supply chains.

“The knock-ons are really incredible,” Schork said. “It’s not just oil… it is natural gas and its multiple derivatives.”

Still, despite the mounting risks, markets have yet to fully price in a worst-case scenario.

Futures prices remain well below the levels seen in prior crises. And even after the latest escalation, oil has struggled to break meaningfully higher — a dynamic Schork finds increasingly puzzling.

“Somewhere out there… something is odd happening,” he said. “Is this the market’s way of telling us… we’re at the end game?”

That may ultimately be the key question. Because while oil prices could spike sharply in the event of further escalation — even toward $150 or higher — history suggests those levels rarely last and often trigger economic recessions.

“High oil prices are a cancer,” Schork said. “The mistake that cancer makes is that it kills its host.”

For now, the market is caught between two narratives: One that sees the blockade as manageable, and another that sees it as the beginning of a much larger supply shock.

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