Factor Model (net +0.0)
Factor Model
net +0.0 1.0 / 10Iran conflict lifts Brent past $112, supply gap widens
Watch: Watch Hormuz blockade status in early April; if supply remains offline for 4+ more weeks, Brent targets $120+. Monitor U.S. gasoline prices—already up $1 in one month to $3.98—for consumer pain signals that could trigger policy intervention.
Brent crude surged 53% in March to $112+ per barrel as Strait of Hormuz closure strips 10–11 million barrels per day from global supply. WTI lagged at $99, widening the Brent-WTI spread to $13 as Asian refiners ration fuel and pay heavy premiums for sour crude. U.S. drillers remain cautious despite profitable prices: only 21% of Dallas Fed respondents plan significant production increases in 2026, citing Middle East uncertainty. Chevron's CEO warns of unpriced supply shocks from prolonged Hormuz closure.
The structural supply loss—10–11M bbl/day offline—is real and measurable, but production response is muted by geopolitical uncertainty and capital discipline. If Hormuz stays closed past April, physical market shortages will force Brent even higher; if a deal emerges, prices crack hard. Drillers' caution suggests the market is overestimating tail-risk geopolitics versus fundamentals.
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