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Brent hit $119.50 in overnight trading Sunday. By 4pm ET Monday it was below $89. WTI spiked to $119.48 before settling at $94.77, then crashed through $86 after the close. A $33 intraday range on the global benchmark. If you traded any part of that move without context, you either made a career or blew up. Here’s what drove each leg and what the forward curve is actually telling you.
The spike came from physical reality. Over the weekend, Bahrain’s national oil company declared force majeure. Saudi Arabia began cutting output. Mojtaba Khamenei, son of the late Ayatollah, was named Iran’s next Supreme Leader, per CNN, signalling hardline continuity rather than capitulation. With the Strait of Hormuz functionally closed for a tenth consecutive day, roughly 20% of global seaborne crude remained trapped. Producers in the Gulf couldn’t ship. Storage was filling up. Output was being curtailed not by choice but by logistics.
That’s how you get $120 oil.
The crash came from a single sentence. Trump told CBS News on Monday afternoon that he thinks “the war is very complete, pretty much,” per NBC News. He repeated the message at a Florida press conference: “We’re achieving major strides toward completing our military objectives. This was just an excursion into something that had to be done.” Later Monday, per Bloomberg, Trump said he plans to waive oil-related sanctions and have the Navy escort tankers through the Strait of Hormuz. WTI dropped from $95 to $86 in the hour after the CBS clip aired. Brent fell 10% from its settle price. The Dow, which had been down 886 points, closed up 239.
That’s how you get $86 oil.
What the G7 Did and Didn’t Do
Before Trump spoke, the market was already pulling back from its overnight highs on reports that G7 finance ministers were meeting to discuss a coordinated release of strategic petroleum reserves. France’s finance minister Roland Lescure confirmed the meeting took place, per Bloomberg, and said the group agreed to “follow the situation very closely” and was “ready to take all necessary measures, including using strategic reserves to stabilize the market.” But the G7 stopped short of announcing an actual release. No barrels were committed. No timeline was given. The statement was a signal of intent, not action.
That distinction matters for your positioning. A coordinated SPR release would physically add supply. A statement about willingness to release is a verbal intervention designed to cap speculative longs. It worked temporarily, pulling Brent from $119 toward $100 before the Trump comments drove the second leg lower. But until barrels actually hit the market, the physical shortage persists. The market entered 2026 with an oversupply thesis. That thesis is now irrelevant for any time horizon shorter than six months.
The Forward Curve Tells a Different Story
Here’s what the panic missed. Contracts for crude delivery in 2027 and 2028 are trading in the high $60s, per TheStreet. The spot market is screaming crisis. The forward curve is pricing a return to normality. That’s backwardation at its most extreme – the front month is trading $30+ above the two-year forward. It means the market believes this is a disruption, not a structural reset. Traders are betting that the Strait reopens, Gulf production resumes, and the pre-war supply glut reasserts itself.
That’s a reasonable bet if the war is short. Trump’s comments Monday suggest he wants it to be short. But Iran’s Revolutionary Guard responded within hours, calling Trump’s remarks “nonsense” and threatening to halt all exports through Hormuz if strikes continue, per TheStreet. Mojtaba Khamenei’s appointment as Supreme Leader is not the profile of a regime preparing to surrender. The tail risk hasn’t gone away. It has been verbally suppressed. If Hormuz doesn’t reopen by the end of March, one analyst cited by FilmoGaz warned prices could reach $150.
The Damage Report
The weekly numbers are historic regardless of where oil closes today. WTI gained 35.6% last week, per FilmoGaz, the biggest weekly gain in futures trading history dating back to 1983. Brent is up more than 40% in March, which would mark its largest monthly gain in data going back to late 2007, per Yahoo Finance. US crude has risen more than 50% since the start of the year. It began January below $60.
Gas at the pump hit $3.49 nationally on Monday, per GasBuddy data cited by NBC News. That’s up more than 50 cents since the war began on February 28. The VIX closed at 31. The S&P financials sector is down 10% year-to-date, with private credit names like Ares, Blackstone, KKR and Apollo down between 26% and 33%, per CNBC. The Nikkei fell 5% Monday, KOSPI triggered its third circuit breaker this month after dropping 6%, and the Stoxx 600 closed down 0.6%.
Ed Yardeni at Yardeni Research put it plainly, per CNN: “This oil shock won’t end until ships can sail freely through the Strait.” Wells Fargo’s Sameer Samana offered the counter: the current acute shortage “will be reversed in the coming months as new supply comes online,” per AP. Both can be right. It depends on whether “coming months” means weeks or quarters. If you’re managing a book, that distinction is the only one that matters.
The Positioning
Here’s where it stands as of Monday’s close. Trump says the war is nearly over. Iran says it isn’t. The G7 is ready to release reserves but hasn’t. The Navy will escort tankers but the strait isn’t open yet. The front-month contract is pricing a crisis. The two-year forward is pricing resolution. If you believe Trump, you’re fading the spike and buying the pullback in equities. If you believe the IRGC, you’re staying long crude and short consumer discretionary.
The base case right now is somewhere in the middle: $85-95 WTI through mid-March if the Navy escort plan materialises and Hormuz partially reopens, with $120+ as the tail risk if Iran escalates and $70 as the downside if a ceasefire holds. Energy equities are bid but crowded. Airlines are getting destroyed. Defence stocks keep grinding higher. The dollar is firm on haven flows but the economy underneath – minus 92,000 jobs last Friday, don’t forget – is deteriorating.
Monday was a $33 range on the global oil benchmark.
That doesn’t happen in normal markets.
This isn’t a normal market.
