Oil prices have always been difficult to predict, and the market has repeatedly proven unforgiving toward those who assume too much certainty. By the end of 2025, the prevailing outlook pointed to an oil supply surplus in 2026. Several major banks and analytical agencies expected global production to exceed demand by millions of barrels per day, with forecasts from JPMorgan Chase suggesting Brent crude could fall to around $60 per barrel by mid-2026.

However, the situation changed rapidly. As tensions escalated in the Middle East and commercial shipping through the Strait of Hormuz was disrupted, US West Texas Intermediate crude climbed above $110 per barrel, its highest level since the price shock of 2022 following Russia’s invasion of Ukraine. This surge occurred as markets reacted to an actual disruption rather than a mere possibility.

Three real constraints now shape the direction of oil prices: spare production capacity, demand elasticity, and the limits of policy intervention.

Spare capacity versus the Strait of Hormuz

The first constraint is global spare production capacity. By the end of 2025, effective spare capacity ranged between 3 and 4 million barrels per day, almost entirely concentrated in Saudi Arabia and the UAE. Under normal conditions, this capacity helps stabilize prices during temporary disruptions. However, with roughly 20 million barrels per day passing through the Strait of Hormuz, this buffer covers only a small fraction of the supply at risk. In other words, spare capacity alone cannot offset a systemic disruption in such a strategic chokepoint.

The demand breaking point

Oil demand is relatively inelastic in the short term. People continue driving, trucks continue delivering goods, and airplanes keep flying. But when prices rise significantly, behavior begins to change. Consumers drive less, companies reduce discretionary travel, and economic growth slows. Historically, West Texas Intermediate reached $147 per barrel in 2008 before the global economy entered recession. Many analysts now consider $120 per barrel the modern “recession threshold,” where energy costs begin to meaningfully affect spending and economic activity.

The strategic petroleum reserve: a stabilizer, not a solution

Policy tools can influence prices, but their impact is limited. The United States currently holds about 415 million barrels in the Strategic Petroleum Reserve, far below its peak of more than 700 million barrels about 15 years ago. Coordinated releases from this reserve can help ease short-term disruptions, but they cannot compensate for major bottlenecks such as those involving the Strait of Hormuz.

Defining the possible scenarios

Limited disruption ($90–$110 per barrel): If disruptions remain temporary and shipping resumes quickly, the current price spike may ease as the expected 2026 supply surplus returns.

Structural shock ($110–$130 per barrel): If disruptions persist for several weeks, such as tanker attacks or damage to infrastructure, the market will begin pricing in sustained supply risk.

Severe disruption (above $140 per barrel): This would require major escalation, such as significant damage to processing facilities in Saudi Arabia or the UAE, forcing global markets to compete aggressively for physical oil supplies.

The likely path forward

Oil markets are ultimately self-correcting, as higher prices eventually reduce demand. However, that adjustment process can be painful and may take time. The real question is not whether prices can rise further — history shows they can — but how long global economies can sustain such levels before demand begins to rebalance and what the broader economic consequences will be.

Copper prices declined on Wednesday as the US dollar strengthened against most major currencies amid easing geopolitical concerns about the war in the Middle East.

The move followed comments by US President Donald Trump suggesting that the war with Iran could end soon, saying there were no longer any targets left for the US military to strike.

He also warned Iran that it would face an unprecedented attack if Tehran attempted to lay naval mines in the Strait of Hormuz.

Rising copper prices highlight future global supply challenges

Copper prices posted strong gains during 2025, and the momentum has continued into 2026, bringing the red metal back into focus in global markets as concerns grow about a potential supply deficit in the coming years.

Analysts believe tightening expectations in the copper market reflect a powerful combination of rising demand driven by urban expansion, the transition to clean energy, and the rapid growth of artificial intelligence infrastructure, alongside slowing growth in mine supply.

During the Benchmark Summit held in Toronto on March 2, Carlos Piñeiro Cruz outlined the key factors shaping the copper market in the near term, warning that structural supply challenges could intensify over the next decade.

Tightening copper supply

Data indicates that the current supply-demand balance in the copper market is becoming unsustainable. In 2025, mining disruptions led to a significant decline in output, with Cruz noting that production in the fourth quarter of 2024 exceeded that of any quarter in 2025, as the sector lost roughly one million metric tons of output.

These losses were caused by several unexpected events, including:

A mudslide at the Grasberg mine operated by Freeport-McMoRan in Indonesia.

Seismic activity at the Kamoa-Kakula project operated by Ivanhoe Mines in the Democratic Republic of Congo.

Labor strikes at BHP’s Escondida mine in Chile.

Although these operations are expected to gradually return to normal production, the disruptions occurred at a time when the market was already facing growing supply constraints.

Cruz expects copper production to grow only about 1.5% in 2025, a rate below the expected growth in demand for refined copper.

Demand growth driven by clean energy and artificial intelligence

On the demand side, the energy transition and the expansion of modern technologies are emerging as the most important growth drivers.

The electric vehicle sector is one of the largest sources of demand. The average copper content in each electric vehicle is expected to decline from 85 kilograms in 2010 to 64 kilograms in 2035, but overall demand will still rise due to the increase in vehicle sales.

Demand for copper in electric and hybrid vehicles is projected to grow from 2.3 million tons in 2025 to around 6 million tons by 2035.

Other technologies such as artificial intelligence, data centers, and communication networks are also adding pressure on electrical infrastructure, increasing the need for power transmission lines, generators, and energy storage systems.

Demand from these sectors is expected to rise from 10 million tons in 2025 to 14 million tons by 2035, with electricity transmission and generation accounting for about 77% of that growth.

A widening supply gap

One of the main conclusions of the presentation is that a supply gap is already forming.

While global supply is expected to grow by about 1% annually, demand could increase by roughly 1.9% per year.

According to estimates, the gap between what the market requires and what will be produced could reach about 7.4 million tons by 2035. Even after accounting for potential new projects, a deficit of around 2.2 million tons would remain.

To avoid this shortage, Cruz suggested that roughly 100 new copper mines with an average production capacity of about 75,000 tons per year would need to be developed by 2035 — a difficult target to achieve.

China emerges as a key player in the copper market

At the same time, the copper market is becoming increasingly fragmented, with China expected to emerge as a dominant force in global copper production and refining.

Cruz explained that China’s large investments in mining projects in the Democratic Republic of Congo reflect long-term planning and major capital commitments, allowing Chinese companies to surpass many Western producers and secure their own supply chains for this critical metal.

According to analysts, warnings about a future copper shortage have circulated within the industry for years, but many markets failed to pay sufficient attention — unlike China, which moved early to secure its future needs.

Meanwhile, the US dollar index rose 0.4% to 99.1 points as of 15:12 GMT, after touching a high of 99.1 and a low of 98.7.

In trading, copper futures for May delivery were down 1% at $5.89 per pound as of 15:07 GMT.

Bitcoin fell below the $70,000 level during Wednesday’s Asian trading session as investors monitored developments in the Middle East conflict.

The world’s largest cryptocurrency was trading down 0.5% at $69,583.5 as of 01:55 a.m. New York time (05:55 GMT).

The decline came after Bitcoin recovered from a brief drop toward the mid-$60,000 range earlier in the week, as markets attempt to assess the economic implications of the escalating war between the United States, Israel, and Iran.

Markets watch war developments

Risk appetite in global financial markets has remained closely tied to developments in the conflict, which has disrupted energy supplies and threatened shipping routes through the Strait of Hormuz.

Oil prices surged at the start of the week following the effective closure of the strait, raising fears of a supply shock and temporarily pushing prices toward $120 per barrel.

However, prices later eased after US President Donald Trump said on Monday that the conflict could end soon, which helped calm some market concerns.

Even so, signs of a rapid de-escalation remain limited. Fighting continues between US and Israeli forces and Iran across the Gulf region, leaving investors cautious about the outlook for global growth and inflation.

Regulatory developments in crypto

At the same time, investors are watching developments in Washington aimed at reviving the CLARITY crypto legislation after it previously stalled.

Reports indicate that US senators are considering a compromise regarding rules governing yields on stablecoins, a key point of disagreement between banks and crypto companies. The proposed legislation aims to provide a clearer regulatory framework for digital assets, which supporters say could open the door for greater institutional participation in the crypto market.

Performance of other cryptocurrencies

Most alternative cryptocurrencies traded near flat levels:

Ethereum declined 1% to $2,018.44.

Ripple fell 0.6% to $1.37.

Traders remain cautious amid geopolitical and economic uncertainty affecting high-risk assets worldwide.

Oil prices rose on Wednesday as markets questioned whether a potential plan by the International Energy Agency to release record volumes from oil reserves would be sufficient to offset any supply shock resulting from the conflict between the United States, Israel, and Iran.

Brent crude futures climbed $3.52, or about 4%, to $91.32 per barrel by 09:22 GMT. US West Texas Intermediate crude also rose $3.69, or 4.4%, to $87.14 per barrel.

The gains followed Tuesday’s session, which saw a sharp decline of more than 11% for both benchmarks, despite an initial jump of around 5% in US oil prices at market open.

The Wall Street Journal reported that the proposed reserve release could exceed 182 million barrels, surpassing the amount injected into the market by International Energy Agency members during two reserve releases in 2022 following Russia’s invasion of Ukraine.

Analysts at Goldman Sachs said a drawdown of that scale would only offset about 12 days of supply disruption estimated at roughly 15.4 million barrels per day from Gulf exports.

Bjarne Schieldrop said: “The oil market does not appear to believe that the largest release ever from strategic reserves will do much to address the current crisis.”

Escalating military tensions

The United States and Israel carried out heavy airstrikes on Iran on Tuesday in what the Pentagon and Iranian officials described as the most intense day of attacks since the war began.

US Central Command also announced that the US military destroyed 16 Iranian minelaying vessels near the Strait of Hormuz after President Donald Trump warned that any mines placed in the strait must be removed immediately.

Despite Trump’s repeated statements that the United States is ready to escort oil tankers through the strait if necessary, sources told Reuters that the US Navy has so far rejected requests from shipping companies to provide military escorts due to the heightened risk of attacks.

International efforts to contain the crisis

Officials from the Group of Seven held an online meeting to discuss the possibility of releasing emergency oil reserves to calm markets. French President Emmanuel Macron is also expected to host a virtual summit of G7 leaders to address the impact of the Middle East conflict on energy markets.

Ongoing supply concerns

Abu Dhabi National Oil Company ADNOC shut down the Ruwais refinery after a fire broke out at one of the complex’s facilities following a drone attack, marking the latest disruption to energy infrastructure caused by the war.

Shipping data also shows that Saudi Arabia is attempting to increase exports through the Red Sea via the Yanbu port, although volumes remain far below the levels needed to compensate for the decline in supplies through the Strait of Hormuz.

Energy consultancy Wood Mackenzie said the war is currently reducing oil and refined product supplies from the Gulf by about 15 million barrels per day, which could push prices toward $150 per barrel.

Morgan Stanley also warned that even a quick resolution to the conflict could mean weeks of disruptions in energy markets.

In the United States, data from the American Petroleum Institute showed that crude oil, gasoline, and distillate inventories declined last week, signaling stronger demand.