Why Oil Could Still Spike Another 20% on Iran Conflict

Oil already made its first move. The more interesting question now is whether markets are underpricing the second one.

That’s the case that oil expert Stephen Schork laid out on Coinage Monday, as traders digest the latest damage from early strikes in the Middle East and calculate the impact of Iran effectively blocking passage through one of the most important trade routes for energy in the world.

The big question now is essentially how long oil reserves in the countries that depend on the Straight of Hormuz for oil shipments may last, and how long the conflict gets drawn out.

“The only way we're going to get a sustained spike in oil prices, is if we see a sustained disruption in the flow of oil,” Schork said. And that is exactly why this story matters far beyond commodity desks. If he’s right, this stops being a niche oil-market panic and starts becoming a broader inflation story again — one that hits gas stations, airline tickets, shipping costs, and eventually the Fed.

What makes the setup so tricky is that the market, at least for now, is still leaning the other way. Schork argued that traders appear to be falling back on an old template: a violent geopolitical headline, a sharp knee-jerk move higher in oil, and then a relatively quick normalization once cooler heads prevail. (That’s partially why oil spiked Monday only to ease gains later in the session.) As Schork explains the market is effectively betting the war mimics prior short-lived Middle East shocks rather than the start of a true supply crisis.

But this time may not fit the old script.

“Right now, we don't have a finish line," Schork said about the current conflict, noting that President Trump suggested the fighting could last four to six weeks at least. Previous conflicts in the area had a clearer objective.

With more uncertainty, Schork relied on technical analysis to tease out different price bands for brent crude at multiple standard deviations. That model correctly signaled oil crossing $75 a barrel on Monday, and $80 on Tuesday, but it also had a third target around $87, and a top scenario of $98 oil prices over the next 20 days if the market reprices just how long the Straight could stay closed.

On Monday, Iran threatened to set fire to any ship trying to make passage. And as Schork noted, roughly one fifth of daily oil supply moves through that channel.

"We do have the stockpiles held by China. We also have the stockpiles held by the states and IEA countries, which is about 1.7 billion barrels of oil. So there is that rainy day supply of oil if we do see a disruption. Now, mind you, it cannot be a lasting disruption," he said.

For consumers, the bigger warning sign may not be crude itself but the refined products that come from it. Schork argued traders should pay close attention to the “crack spread,” the margin between crude and fuels like gasoline, diesel, and jet fuel. “It's not necessarily about the crude oil price,” he said. “It's about the stuff that the consumer puts in at this point.” In other words, if this conflict worsens, Americans are likely to feel it less as an abstract move in oil futures and more directly at the pump.

That is what leaves markets in such an uneasy position. Stocks have wobbled, gold has climbed, Bitcoin has pushed higher, and platforms like Hyperliquid are increasingly reflecting the kind of round-the-clock macro trading once reserved for traditional markets.

Oil, meanwhile, remains caught between complacency and panic. If the conflict cools quickly, Monday’s jump may revert back to the mean. But if disruption lingers, the market may be forced to relearn a familiar lesson: the first move in oil is often not the one that hurts the most.