Iran war may extend gas crisis for two years, impacting crude oil prices

The International Energy Agency projects the gas crisis from the Iran war may extend for two years, pushing odds on crude oil hitting $90 by end of June sharply higher, with a 25% expected move in odds on the crude oil $90 by end of June market.

Market reaction

The disruption in the Strait of Hormuz, which handles a large share of global oil transit, is the core supply shock driving the move. With 68 days until resolution, traders are pricing in elevated risk of sustained high prices.

The US crude oil reserves market, which tracks whether reserves fall to 325M barrels by May 1, sits at 1.5% YES. Trading volume there has been minimal, meaning traders remain skeptical of a large SPR drawdown in the near term even with the broader crisis.

Why it matters

A two-year gas crisis projection from the IEA changes the calculus for oil price bets. Prolonged supply disruption through the Strait of Hormuz makes $90 crude by June more plausible than previous market pricing suggested. The term structure of the crude oil market indicates traders expect continued volatility through June.

What to watch

A YES share on crude hitting $90 by June 30 is a direct bet on the crisis persisting and supply staying constrained. Announcements from the U.S. Energy Information Administration and OPEC are the main catalysts that could move these markets further, particularly any production cuts or additional supply disruptions.

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