Will WTI crude average above $85/bbl for Q3 2026?
The Condition
Strait of Hormuz sustained disruption (>50% traffic reduction for 14+ days) before June 30, 2026
Our Ensemble Estimates
Given Hormuz sustained disruption: Will WTI crude average above $85/bbl for Q3 2026?
Given Hormuz reopens: Will WTI crude average above $85/bbl for Q3 2026?
Causal Effect
Hormuz disruption worth ~58pp to WTI >$85 probability (73% if disrupted vs 15% if not). The Hormuz paradox — OPEC+ spare capacity trapped behind the disrupted chokepoint — is the decisive structural mechanism.
Why This Matters
Tests whether a sustained Hormuz disruption keeps the geopolitical risk premium elevated through Q3 2026. With WTI at ~$72.57 pre-shock and an estimated $17-22/bbl geopolitical premium, the severe scenario (Brent $100-130) implies WTI well above $85. The Hormuz paradox — OPEC+ spare capacity trapped behind the disrupted chokepoint — limits deliverable offsets to 1.5-2.5 mbpd against a 3-5 mbpd base case disruption, supporting sustained elevated pricing. Key offset: SPR release (415M barrels available) could moderate prices if politically authorized.
Resolution Criteria
EIA weekly WTI spot price data for July 1 through September 30, 2026 averages above $85.00 per barrel
Source Analysis
Oil carries an estimated $17-22/bbl geopolitical premium above $60-64 fundamental equilibrium; premium approaching CRISIS territory if Hormuz disruption persists beyond 72 hours