Executive Brief — 2026 Hormuz Oil Shock
date: 2026-04-12
status: Current as of Apr 12 23:00 GMT+2
sources: EIA STEO April 2026, Goldman Sachs, Morgan Stanley, JPMorgan, Vitol, Dallas Fed, WTO, UNCTAD, Reuters, Apr 7/10 daily entries
detailed tracking: [OPEN-QUESTIONS]
Q2: Price Impact — How High Does It Go?
Current state: Brent retreated from $128 intraday peak (Apr 2) to the ~$90s post-Apr 7 ceasefire. Goldman revised Q2 forecast to ~$90. Market is pricing a ceasefire-holds scenario.
Three-scenario price framework (now calibrated):
| Scenario | Brent | Trigger | Probability Signal |
|---|---|---|---|
| **A — Ceasefire holds** | $80–$90 | Durable agreement, commercial traffic resumes | Most likely right now |
| **B — Stalemate persists** | $100–$120 | Hormuz stays constrained 1+ month | Realistic tail |
| **C — Islamabad fails** | $150–$180 | Hormuz closes again, conflict resumes | Tail scenario, non-trivial |
Key constraint: EIA's "conflict resolves by end of April → May recovery" assumption is structurally impossible even in the best case. The physical market lag of 45–60 days (confirmed by Morgan Stanley and Vitol) means the market stays tight through May–June regardless of political outcomes.
Demand destruction: At ~$110/b, visible demand destruction is only ~1 mbd. To balance an 8–10 mbd deficit requires prices exceeding $150/b — Morgan Stanley/JPMorgan territory. The demand destruction ceiling is real but requires the $150+ scenario to activate.
→ See: [Q2-PRICE-IMPACT] · [PRICE-ELASTICITY] · [OPEN-QUESTIONS Q2.1–Q2.4]
What Changed Today
- **Apr 7:** Provisional ceasefire announced. Oil prices plunge from $128 intraday peak.
- **Apr 10:** Islamabad summit held. Iran presented 10-point demands (full sanctions removal, Hormuz control, frozen assets release, 3.67% enrichment limit). Trump signaled openness to gradual sanctions relief tied to compliance. No durable agreement yet — talks ongoing.
- **Goldman revised Q2** Brent from ~$110 to ~$90 post-ceasefire.
- **Morgan Stanley + Vitol** confirmed 45–60 day physical market lag makes May recovery impossible.
- **Vitol** physical market reality check: traders caught offside at onset, $3B extra credit lines secured, market pricing reopening "sooner rather than later."
Detailed 25-question tracking: [OPEN-QUESTIONS]
Historical context: [HISTORICAL-PARALLELS]