Oil Does Not Wait for Equilibrium

Oil has a way of exposing how little equilibrium really matters once fear gets a bid, because what begins as a physical disruption quickly becomes a psychological one, then a policy one, then a financial one, and by the time people start talking about supply and demand again the real move has already come and gone.

That is the right frame for April 6, 2026, because this market is no longer trading like a normal commodity market. Brent is sitting around $115 and WTI around $110 after one of the most violent stretches in years, with Reuters reporting that Brent surged about 60% in March. The trigger is obvious enough: the war with Iran and the disruption of flows through the Strait of Hormuz. But the tape is doing more than discounting lost barrels.

I think Soros still reads so well here. In The Perilous Price of Oil, he wrote that prices “do not necessarily tend toward equilibrium,” and that oil can develop a “backward-sloping supply curve” when producers expect higher prices ahead and prefer to keep reserves in the ground. He also warned that when the turn comes, the bust is often “shorter and sharper than the boom.” That is the whole setup - summary of my entire thesis about betting against oil. Oil is never just reflecting reality. It is changing producer behavior, consumer behavior, and investor behavior in real time.

The fundamental shock is obviously serious, real, and will have long term effects across the world. The IEA said in its March Oil Market Report that the Middle East war created “the largest supply disruption in the history of the global oil market,” with flows through Hormuz falling from around 20 mb/d to a trickle and global supply projected to plunge by 8 mb/d in March. That is why the initial spike was justified. But the reflexive layer is now doing its own work. Reuters reported today that U.S. crude premiums have exploded as Asian and European refiners scramble for replacement barrels, with WTI Midland cargoes to North Asia fetching premiums of $30 to $40 over regional benchmarks and WTI into Europe trading around $15 over dated Brent. Once that happens, scarcity becomes a self-reinforcing behavior. (IEA)

OPEC+ recently agreed to raise output quotas by just 206,000 bpd for May, which sounds like a policy response until you put it next to a blocked chokepoint and realize it barely matters. Saudi Arabia simultaneously raised the official selling price of Arab Light to Asia by $17. Meanwhile, a ceasefire framework has been floated, but Iran rejected reopening Hormuz under pressure from Washington. So the market is trying to price diplomacy in the futures curve while pricing outright physical stress in the spot market, and that is why the front end remains violent.

My near-term assumption is straightforward: crude stays elevated because the shock is still active, inventories are being used as a bridge, and nobody with any sense wants to fade a war premium while the key artery of the global oil market remains impaired. That leaves room for another squeeze, especially if shipping disruptions persist deeper into April. Reuters reported that analysts in its latest poll raised their 2026 Brent forecast to $82.85 from $63.85 in February, the biggest jump in the history of that survey, and JPMorgan has warned oil could move above $150 if disruptions last into mid-May. In a market like this, overshoots are easier than retracements.

But Soros’ real insight was never just that oil can bubble. The real insight (in my opinoin) was that the move eventually becomes self-defeating. Higher oil tightens financial conditions, squeezes margins, taxes consumption, and starts to erode the demand assumptions that helped justify the rally. The IEA has already cut its 2026 oil demand growth forecast to 640 kb/d and explicitly said higher prices and a more precarious global economic outlook are beginning to hit demand. That is the next phase. First comes the supply shock. Then the price spike. Then the slowdown that the spike itself helps create.

So my forward view is that oil remains bid near term and vulnerable medium term. If Hormuz meaningfully reopens and flows normalize (which I think will happen in April 2026 - probably in the next two weeks), crude can break hard in the second half of 2026 because too much of the recent move has been built on fear, forced procurement, and front-end dislocation. If the disruption drags on, the upside is still there, but the macro cost rises with it, and the longer oil stays above $100 the more likely it becomes that crude stops being an inflation signal and starts becoming the mechanism of the next growth scare. That, more than any single headline, is the Soros point. The barrels are real. The fear is real. The overshoot is real too.