How High Could Oil Prices Go?

Oil prices are notoriously difficult to forecast.

The oil market has a long history of embarrassing anyone who speaks with too much confidence. Recent headlines include predictions of oil reaching $200 per barrel. That may sound dramatic, but history reminds us that sharp oil spikes are not unusual.

A few examples:

1973 Oil Embargo
Arab oil producers restricted exports to Western nations. Oil rose from roughly $3 per barrel to about $12 in a year. Adjusted for inflation, that would be approximately $100 per barrel today.

1979 Iranian Revolution
Political upheaval disrupted global supply. Oil rose from approximately $15 to $25 per barrel, or well over $100 in today’s dollars.

2008 Commodity Boom
Strong global demand pushed oil to nearly $147 per barrel.

2022 Ukraine Energy Crisis
Supply concerns following Russia’s invasion of Ukraine sent oil above $100 per barrel, with brief spikes approaching $120.

The lesson? Oil can move quickly when supply is disrupted.

Ironically, as we entered 2026, most forecasts expected the opposite. Major financial institutions anticipated a global supply surplus, with some expecting oil prices to drift lower.

That changed quickly.

Escalating conflict in the Middle East has raised concerns about the Strait of Hormuz, one of the most important shipping routes in the world. Roughly 20 million barrels of oil move through this narrow waterway each day, representing approximately 20% of global petroleum liquids consumption.

When supply is threatened, markets react.

Normally, short-term disruptions can be managed through spare production capacity. At the end of 2025, the world had an estimated 3 to 4 million barrels per day of spare capacity, largely in Saudi Arabia and the UAE.

That sounds reassuring until you compare it to the scale of the problem.

Even if all spare capacity came online immediately, it would only replace a fraction of the oil that typically moves through the Strait.

So how high could oil go?

The honest answer is that no one knows. Rather than pretending precision, it is more useful to think in ranges.

Contained disruption: $90 to $110 WTI
If the disruption proves temporary and shipping resumes quickly, prices could stabilize.

Prolonged disruption: $110 to $130 WTI
If supply issues persist for several weeks, markets will begin pricing in a more sustained shortage.

Severe escalation: $140+ WTI
A broader regional conflict involving major oil infrastructure could push prices significantly higher.

At some point, however, high prices create their own solution. Demand slows, governments intervene, and markets adjust.

Canada is not immune.

Although Canada is the world’s fourth-largest oil producer, oil is priced globally. Higher prices may benefit parts of Canada’s energy sector, but consumers still feel it at the gas pump.

What has been surprising is how resilient stock markets have remained.

Despite geopolitical tensions, markets in both Canada and the U.S. remain close to record highs.

Why?

Markets are ultimately driven by corporate earnings, and so far, earnings have remained stronger than expected. The technology sector continues to benefit from AI-driven demand, while Canada’s energy sector has been supported by rising oil prices.

The bigger concern may be inflation.

Energy shocks can push inflation higher. If that happens, central banks may be forced to keep interest rates elevated for longer.

Markets can tolerate uncertainty.

They are far less comfortable with rising interest rates.

We saw that clearly in 2022.

Periods like this can feel unsettling. Headlines become dramatic, predictions become extreme, and emotions can take over.

History reminds us that markets have weathered oil shocks, wars, inflation scares, and recessions before.

Volatility is never comfortable, but it can create opportunity.

As always, we are here to help you navigate through it.