The risk in the Strait of Hormuz is compounded by an expanding supply gap, and Brent crude oil prices may surge to $150.

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Source: HSBC Tong

Huaitong Finance App News—Driven by geopolitical conflicts and expectations of supply contraction, the global crude oil market continues to fluctuate. In its latest report, Société Générale (France) has significantly raised its outlook for oil prices and noted that under extreme scenarios, Brent crude could rise to $150 per barrel. This forecast is based on the Strait of Hormuz experiencing a two-month disruption, which would cause a significant shock to global energy supply.

From the perspective of supply-and-demand structure, the market is currently facing a clear supply shortfall. The institution expects that, under the impact of the conflict, OPEC’s production losses will reach 15 million barrels per day in March, and form a supply gap of about 8 million barrels per day in April. Meanwhile, production in the Gulf states is expected to fall by up to 3 million barrels per day over the full year, while Iran’s export capacity may decrease by 2 million barrels per day, further exacerbating supply tightness.

Société Générale’s commodities team said: “Against the backdrop of constrained supply and tight inventories, oil prices may see violent spikes in the short term and remain at high levels.”

On the demand side, although high oil prices have started to curb some consumption, overall demand still shows strong resilience. It is expected that global crude oil demand will gradually rise to around 106 million barrels per day and remain at high levels. Because the decline in demand is limited, it is difficult to fully offset the impact caused by supply contraction, so the market overall remains in a tight equilibrium—or even a shortage—state.

Inventory levels are also an important factor supporting oil prices. The report shows that the current inventory coverage days are still below the five-year average level, meaning the market’s buffering capacity is limited. Once supply is further disrupted, prices are more likely to experience sharp fluctuations.

However, from a time perspective, extreme increases are not a long-term trend. The institution expects that, as part of OPEC’s capacity gradually recovers starting in May, together with G7 countries releasing strategic reserves and Asian countries’ demand rebounding to fill the gap, the market’s supply-and-demand relationship will gradually improve. Under this backdrop, oil prices may fluctuate around a high average of about $125 in April, with a risk of a move to $150, but then gradually fall back to roughly $80 by year-end.

From the perspective of market sentiment, the current trading logic has shifted from “short-term shocks” to “structural shortages.” On the one hand, investors are focusing on the upward price risks stemming from extreme events; on the other hand, they are also beginning to evaluate how high oil prices suppress demand and the possibility of policy intervention.

Technically, on the daily timeframe, Brent crude overall is in a strong upward trend, but after a rapid rally, momentum begins to diverge and price volatility increases. Key resistance areas to watch are $112 and $125. Support lies in the $100 and $95 regions. On the 4-hour timeframe, price is showing a high-range consolidation structure; short-term momentum indicators show signs of being overbought and then rolling over, indicating the market has a need for a technical correction. If it falls back to the key support areas and stabilizes, it may still rise again.

Editor’s summary

Overall, the crude oil market is at a critical stage where a mismatch between supply and demand is compounded by geopolitical risk. In the short term, Hormuz Strait risks and expectations of supply disruption could drive oil prices sharply higher; but over the medium to long term, as supply gradually recovers and demand adjusts, there is room for prices to pull back. Current market volatility has increased significantly; investors need to watch changes in supply and demand and signals of policy intervention in a high-risk environment, seize stage-by-stage opportunities, and control risk.

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