Wall Street is already worried about "$120 or even $150 oil prices": cell phones, cars, clothes, cosmetics... are all on the path to rising prices.

Wall Street is already worried about "$120 or even $150 oil prices": cell phones, cars, clothes, cosmetics... are all on the path to rising prices.

```

In the past two months, tensions in the Strait of Hormuz have continued to dominate news headlines.

A report released by Goldman Sachs on April 26 gave a number: every day, 14.4 million barrels of Persian Gulf crude oil have “disappeared” from the market.

Bank of America and Goldman Sachs both warned: if a US-Iran “fragile ceasefire” occurs, Brent crude oil will target USD 120; if US-Iran hostilities escalate further, it is by no means alarmist to expect a historic high of USD 150 or even higher.

But for ordinary people, the most obvious feeling may not be at the gas station.

“The economic risk is much greater than suggested by the base case for crude oil,” because aside from oil prices, “abnormally high refined oil prices, risk of product shortages, and an unprecedented speed of shock” may be the real hidden dangers.

These hidden dangers are tucked inside consumers’ phone shells, car tires, and clothing fibers.

The current data already show the problem: global prices for basic chemicals have surged over 60% in recent weeks, with both the speed and scale of the increase reaching twice that of the European energy crisis in 2022. Currently, about 20% of global chemical supplies have been disrupted.

In real life, the current global average chemical inventory coverage period across industries is only 3.7 months.

“Daily loss of thousands of barrels of crude oil output”

Let’s first look at what’s happened on the crude oil front.

Goldman Sachs estimates that in April, the global oil market was short by 11 to 12 million barrels per day.

“We estimate that the daily loss of 14.4 million barrels of crude oil from the Persian Gulf is driving global oil inventories to be drawn down at a rate of 11–12 million barrels per day in April—a record.”

What does this mean? The daily inventory draw exceeds the daily consumption of all of Germany.

Even more astonishing is the speed of the supply-demand reversal. In 2025, the global market was still in a surplus of 1.8 million barrels per day. By the second quarter of 2026, there is directly a 9.4 million barrel per day deficit. It took just one quarter to go from surplus to deficit.

Crude Inventory/Price Chart

Oil is only the “fuse,” chemicals are the “explosives”

The impact of crude oil shortages goes far beyond just more expensive gasoline.

Oil has two uses: one is to burn, the other is to “eat.” To burn means fuel—gasoline, diesel, jet fuel that drive cars, airplanes, and power plants.

To “eat,” refers to petrochemical feedstocks—naphtha, ethane, liquefied petroleum gas (LPG); these go through cracking to become ethylene, propylene, benzene, and other basic chemicals, which then become plastics, synthetic fibers, rubber, solvents, coatings... ultimately becoming mobile phone shells, car bumpers, T-shirt fabrics, lipstick tubes, pharmaceutical packaging.

Most people think only of gasoline, but Goldman Sachs specifically reminded of an overlooked risk: “the risk of refined oil shortages.” Data show that the price spread between refined oil and crude oil has reached a record high.

The data is perhaps even more striking: in recent weeks, basic chemical prices have surged by over 60%, at a speed and magnitude twice that of the 2022 European energy crisis.

For comparison: the 2022 crisis mainly hit natural gas, which only accounts for 10–15% of chemical costs. This time, it directly hits naphtha, which makes up 70% of chemical costs.

This is the “amplifier”—small fluctuations on the raw material side are multiplied several times by the time they reach the finished product side.

Refined Oil Premium Chart

Asia-Pacific takes the brunt, shock spreads from T-shirts to chips

So, who is hurt the most? The answer is Asia-Pacific. The Asia-Pacific region is the core production area for global chemicals, accounting for about 65% of global output and about 51% of manufacturing added value.

And the raw materials needed for chemical production in Asia-Pacific are about 70% dependent on Middle Eastern imports—much higher than Europe’s 20%. Now, Middle Eastern goods can’t get out.

Currently, multiple petrochemical plants in Asia have dropped to the lowest operating loads (50% to 60%), and as inventories continue to be drawn down, some factories face risk of shutdown.

The transmission path of the shock is spreading from low value-added to high value-added industries:

  • First wave: textiles, packaging, auto parts—these industries are directly dependent on petrochemical feedstocks, and react fastest;
  • Second wave: construction—insulation materials, pipes, paints are all petrochemical derivatives;
  • Third wave: Korean semiconductor and memory chip production—chip manufacturing requires large amounts of chemical solvents, which are usually byproducts of basic chemical production and not produced independently; once upstream supply is cut off, they can’t be replenished separately.

Your mobile phone, clothes, and car are all on the way up in price

The price increase of petrochemical feedstocks may ultimately be transmitted to every consumer.

Goldman’s market model estimates show that higher prices of petrochemical derivatives bring an average cost impact of about 11% on the cost of goods sold (COGS) for European and American companies. But the impact varies significantly by industry: furniture (20%), medical beauty (18%), clothing (15%), automobiles (11%), consumer electronics (7%).

Note that the above numbers only reflect the chemical price factor, not including logistics, transportation, and other energy costs rising.

So here’s the question: If the impact is so great, why haven’t ordinary people felt it yet? There are two reasons:

First, it takes time to transmit. There’s a “6 to 12 months lag” from chemicals price hikes to end-consumer product price hikes. Why the lag? Because European and American company pricing contracts are often quarterly, semiannual, or annual cycles—the end price won’t be adjusted immediately.

The average inventory coverage period by industry is about 3.7 months. The auto industry has the longest lag, at 9 to 18 months, and most automakers say the actual impact will be limited until 2026; the apparel industry’s lag is shorter, about 3 to 6 months.

The price pressure peak is expected to appear in Q3 or Q4 of 2026.

Second, supply chain recovery itself takes a long time.

Goldman’s chemistry report provides a detailed timeline. Even if the Strait reopens immediately:

  • Safe passage approval: about 30 days
  • Shipping backlog clearance: about 30 days
  • Transport to Asia or Europe: about 25 days
  • Port congestion: about 10 days
  • Cracker restart: about 45 days

Total about 140 days.

Dow Chemical said it expects the impact to last far beyond the end of the conflict, and that normalization of petrochemical supply chains will take about 250 to 275 days.

That is, even in the most optimistic scenario—the Strait reopens immediately, everything goes smoothly—the easing of physical feedstock supply won’t come until mid-to-late May 2026; add up all the friction factors, and it may be delayed until mid-September.

More troublesome is the issue of priority. In cleaning up the Strait shipping backlog, chemicals rank after oil, fuels, and fertilizers, facing a “double line” dilemma.

On a comprehensive assessment, physical supply easing for European and Asian chemicals is not expected before Q3 2026.

US stocks frequently hit new highs—why hasn't the market fully reacted?

This leads to a contradiction: if the impact is so great, why are US stocks still hitting new highs, and oil prices hovering near $90?

Recently, the three major US stock indexes have hit record highs, and global risk assets have shown strong resilience. Against the backdrop of the world’s most important oil channel, the Strait of Hormuz, being nearly paralyzed, Brent crude oil remains oscillating near $90/bbl.

The market seems to be pricing in a “soft landing.” Citi's analysis offers several explanations:

First, inventory buffer. Before the conflict broke out, global oil inventories had accumulated an excess of about 800 million barrels over the previous 12 months, providing a thick cushion. The current cumulative shortfall is about 500 million barrels, with strategic reserve releases also smoothing the impact.

Second, declining oil intensity. Compared to the 1970s and 2008, the dependence of global GDP on oil is much lower now, especially in the US. Citi estimates that in the base case, global oil product spending accounts for about 3.6% to 4.4% of GDP, much lower than the peaks in the late 1970s and 2008. To replicate the shock intensity of those two crises, global oil prices would need to reach about $220/bbl, and the US would need about $280/bbl “full cost.”

Third, the market expects the conflict to be resolved quickly. Because the crisis is so large in scale, the market generally believes that all sides have sufficient motivation to negotiate an end quickly.

But such optimism is being tested.

Goldman warns: "Recent conversations with investors show that warning signals from the chemical industry are being noticed, but not yet fully recognized, largely because the shock hasn’t been personally felt yet."

Goldman further points out that petrochemical feedstock flow must be immediately restored, otherwise the “left-tail scenario” of severe supply chain disruption and sharp demand contraction will no longer be a low-probability event, but will become the base case.

Bank of America also points out that even if a peace agreement is reached, there’s still a huge gap between 'open' and 'normal operations'—mine clearance, safety inspections, insurance premiums, infrastructure repair, every step takes time.

Wall Street betting on June, industries waiting for August

Why is the Strait blockade so entrenched? Citi’s think tank deconstructed a cold-blooded "DOV algorithm":

  • D (Deterrence): Slowly push up global prices, make Europe and America endure inflation pain, restrain their military intervention.
  • O (Oil revenue): Drain global inventories, so that in the future, explosive rises in oil prices will multiply oil selling revenues.
  • V (Vengeance): Inflict maximum economic retaliation on hostile camps.

Under the DOV algorithm, “delay” itself is the most efficient weapon. Keeping the blockade in a "damaged but not destroyed" Schrodinger state pins Western economies down in the mire of inflation.

This has led directly to a “fundamental split” between the financial and industrial sectors. Citi judges that Iran’s blockade strategy “can last at least until the end of May, and possibly until the end of June.”

But a confidential Dallas Federal Reserve survey disclosed by UBS shatters this illusion: up to 80% of oil and gas industry executives believe it’s impossible to return to normal before August!

The prediction market (Polymarket) prices the probability of normal recovery before the end of June at 54%.

One side is the “hope” of financial markets, the other is the “preparation” of industry. The gap between the two is where risk lies.

Oil Price Outlook: Upside Risks Exceed Downside

On the crude oil front, many institutions have raised oil price forecasts.

Goldman Sachs raised its Q4 2026 Brent crude forecast to $90/bbl (previously $80), and set three scenarios:

  • Optimistic scenario: if Strait exports return to normal from early May to mid-June, average Brent for Q4 2026 will be below $80/bbl;
  • Base case: if exports recover mid-May to late June, average $90/bbl;
  • Adverse case: if recovery is delayed to late July, average over $100/bbl;
  • Severe adverse case: if Hormuz flows cannot return above 70% in the long term, average may approach $120/bbl.

Bank of America offers an even more aggressive view: if the Strait remains in a "neither fully open nor fully closed" fragile ceasefire state, Brent’s 2026 average may reach $120/bbl; if conflict resumes and stretches into summer, averages may hit $150/bbl or even higher.

Citi postpones Hormuz’s reopening in its base case to end-May, setting a 0–3 month Brent target price of $120/bbl, and notes the Iranian regime is trying to maximize a compound utility function of "Deterrence, Oil revenue, and Vengeance"—keeping the Strait blocked achieves both inflicting economic pain on opponents and maximizing future oil sales value. Citi believes this strategy "can last at least until end-May and possibly until end-June".

Risk warnings and disclaimerThe market involves risks, and investment must be cautious. This article does not constitute personal investment advice, nor does it take into account individual users' special investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their particular circumstances. Invest accordingly at your own risk. ```