War Gaming The Price Of Oil

Energy War Gaming The Price Of Oil By Ed Hirs,

Forbes contributors publish independent expert analyses and insights. Finance professional and economist in energy markets Follow Author Jun 21, 2026, 10:30pm EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.Hundreds of oil tankers remain bottled up in the Persian Gulf (at this moment).getty Iran’s blockade of the Strait of Hormuz, long threatened, became fact with the U.S. attack on Iran. Removing approximately 10 million barrels per day caused consumers to bid up the price of oil that was making it market. Whether or not the negotiated MOU frames up a lasting peace, others can now manipulate the oil markets and the price: Israel, China, Russia, Saudi Arabia, and Ukraine. Let’s see how.

The global oil market totaled about 106 million barrels per day prewar. The price of West Texas Intermediate crude was $56 per barrel—Nobel winning economist William Nordhaus showed that oil prices all over the world, including the Brent price, move in lockstep. Oil markets trade almost on a just-in-time basis, with oil rapidly transported to refineries and fuel rapidly sold to consumers. Any small interruptions in supply are magnified quickly in price because consumers will bite the bullet and pay $10 per gallon if that’s what it takes to get to work and school. As calculated, the crude oil price elasticity of demand is approximately -0.047, meaning that for a 10% decline in quantity reaching the market, the crude price would increase between 200% and 250%, for a WTI price between $168 and $196 per barrel. While some spot sales of diesel at $150 per barrel and jet fuel at $200 per barrel have been reported in Northern Europe, WTI has not risen above $113 per barrel and has settled, close to $75 per barrel post MOU. Why?