Oil Hits $107 a Barrel — And Experts Say It’s Not Over Yet

On a Monday morning in early March, a trader at a desk in London watched the opening price of U.S. crude flash across her screen and felt the kind of still that happens before someone says something out loud that everyone already knows. WTI hit $120 per barrel at the open. It didn’t stay there — it retreated to around $107 over the course of the morning — but the number had been printed. The threshold had been crossed, briefly and violently, and the market had its answer to a question that had been building for weeks: this wasn’t going to resolve itself quietly. Six weeks into the U.S.-Iran conflict, with the Strait of Hormuz largely closed and diplomatic talks repeatedly collapsing, oil at $107 is not the shock anymore. It’s the floor.

The context that produced these prices is worth laying out clearly, because the chain of events has been rapid enough that the full picture can get lost in the daily headline churn. The conflict began in late February 2026 with U.S. and Israeli airstrikes on Iranian nuclear infrastructure. Iran responded by threatening, and then effectively implementing, restrictions on shipping through the Strait of Hormuz — the narrow waterway between Oman and Iran through which roughly 20% of the world’s oil and liquefied natural gas passes every day.

Saudi Arabia disclosed that Iranian attacks had temporarily cut its production capacity by 600,000 barrels per day, though those flows have since been largely restored. The U.S. announced a naval blockade targeting vessels moving to and from Iranian ports. Peace talks in Islamabad over the April weekend produced nothing. And oil, which had briefly retreated toward $95 during a fragile ceasefire announcement, surged back above $100 — and then kept going.

The numbers being thrown around by analysts now have a different quality than they did a month ago. When Goldman Sachs revised its oil forecasts upward, it wasn’t a dramatic shift in analytical positioning — it was the bank catching up to what the futures market was already pricing. BMO has warned that if Brent crude reaches $150 per barrel, the resulting economic shock would be severe enough to tip the global economy into a meaningful downturn.

Some analysts on the more cautious side of the distribution are citing $200–$250 as an extreme scenario if the crisis deepens — not a base case, they’re careful to add, but no longer entirely outside the range of possibilities being modeled. There’s a point, somewhere between $120 and $150, at which demand destruction becomes the mechanism that resolves the price problem, but nobody is entirely certain where that point sits in 2026, with inventories already depleted and spare capacity already constrained.

The geopolitical dynamics are genuinely hard to read, which is part of what makes forecasting oil prices so difficult right now. President Trump threatened to take out Iran “in one night” ahead of a Tuesday deadline for Hormuz to reopen. Iran rejected temporary ceasefire proposals, demanding permanent peace and sanctions relief — conditions the U.S. has not indicated it would accept. Some Asian countries struck individual deals with Iran to allow their vessels through, but the insurance costs for those transits have become so punitive that the economics barely work.

A senior fund manager at W1M described the situation clearly: even if an agreement came tomorrow, the LNG facilities that were switched off would take three to four months to restart. The supply problem doesn’t end when the diplomacy does. It ends weeks or months later, after the physical infrastructure has been brought back online and the tankers have made their runs.

The downstream effects are already visible and accelerating. U.S. gasoline prices crossed $4.30 per gallon in early April — the first time that threshold has been crossed since Russia invaded Ukraine in 2022. March CPI came in at 3.3% year-over-year, driven heavily by a 10.9% jump in energy costs.

Consumer sentiment, as measured by the University of Michigan, fell to a potential record low in April preliminary readings. The jobs report for February showed the U.S. economy shed 92,000 nonfarm jobs, with unemployment rising to 4.4% and wage growth accelerating — a combination that complicates every path forward for the Federal Reserve. JPMorgan’s Jamie Dimon warned publicly that global interest rates could rise as the energy shock feeds into broader inflation. The Fed, which had been expected to cut rates twice this year, now looks effectively paralyzed.

There’s a supply-side complication that gets less attention than oil prices but may matter more over the coming months: nitrogen fertilizer. The Haber-Bosch process, which produces synthetic fertilizer and supports roughly half of global food production, runs primarily on natural gas. The Gulf region handles a substantial share of global nitrogen fertilizer trade. With traffic through the Strait of Hormuz near a halt and Gulf-region producers managing the conflict’s disruptions, the conditions for a secondary food price shock are quietly assembling. Whatever the March CPI print shows, analysts are flagging that April and May figures will likely be higher, as energy cost increases work their way through supply chains, transportation, and eventually food prices at a grocery level that ordinary consumers notice immediately.

Watching the oil market right now, there’s a feeling that the market and the policymakers are running on different timelines. The market is pricing in weeks or months of continued disruption. The diplomatic language suggests a resolution could come quickly if the right agreement were reached. Both of those statements can be true simultaneously, and the gap between them is where all the uncertainty lives. The conflict may end, and prices retreat sharply within days of a genuine agreement. It’s also possible the structural damage — depleted reserves, offline LNG facilities, elevated insurance costs, shaken consumer confidence — means that even a ceasefire doesn’t return oil to its pre-conflict price for many months. The $107 number on the screen feels like a pause in a larger story, not a destination.