Crude oil has staged a dramatic retreat, falling nearly 40% from the highs reached in March when tensions in the Middle East first erupted. As of this writing, WTI is nudging $74 a barrel, with Brent carrying roughly a $4 premium over it. The central question is whether the market has simply chosen to look past the geopolitical risks that could still surface over the coming weeks — and the evidence suggests it has.
Why the Market Looked Past the Risk
The market discounted much of the geopolitical danger because the feared peak in prices never materialized. Many traders and analysts had been positioning for $150 a barrel or even higher, anticipating a catastrophic disruption. That spike never came. Instead, prices have settled back to current levels, and there is good reason to believe this is the range we will live with for some time.
A floor has effectively formed at around $75 for WTI, with Brent sitting $4 to $5 higher. The logic behind this floor is structural rather than political: if prices fall much below this point, buyers who need to rebuild their inventories will step in and resupply, putting upward pressure back on the price. The entire world is short on storage right now. The U.S. Strategic Petroleum Reserve, for instance, has been drawn down to 380 million barrels when it should hold roughly 700 million when full. Everyone needs to resupply, and that latent demand creates a natural buffer against deeper price declines.
The Strait of Hormuz Is About More Than Politics
President Trump pointed to roughly 19 million barrels of crude flowing through the Strait of Hormuz on a recent Monday as evidence the chokepoint is open and functioning. But it would be a mistake to think the situation can normalize overnight simply because the political tension has eased.
The strait's functioning depends on more than diplomacy. It hinges on ship owners deciding it is safe to sail, on insurance companies pricing risk at workable levels, and on customers committing to deliveries. Unwinding the disruption across all of these actors takes a long time. Even after a strong week, the system remains far from fully effective. Restoring the rhythm of shipboard traffic — getting vessels where they need to go, delivering their loads, returning, picking up another load, and resupplying — is a slow process that is still a long way from complete.
A Very Different Event for Americans Versus the Rest of the World
This episode has played out in fundamentally different ways depending on where you live. For the United States, the shock was real but it was primarily about price, not availability. America always had the supply, a fact that becomes even clearer as the conversation moves beyond gasoline and diesel to natural gas and propane. The country's robust system of developed natural resources across all of these fuels insulated it from the worst effects.
Most of the rest of the world is not so fortunate. Lacking America's energy abundance, other nations experienced something closer to a genuine supply crisis. As a result, they are now responding on several fronts. First, they are scrambling to rebuild their depleted stocks. Second, they are rethinking the chokepoints in their supply chains. The Strait of Hormuz is the most obvious vulnerability, but it is not the only one — there are other straits, and there is the Panama Canal. Countries are reconsidering their energy relationships, where they source their supply, and what longer-term solutions might look like. A significant amount of shifting in these arrangements lies ahead.
One of the more surprising developments of the past month has been the number of countries turning back to coal. Coal had been widely written off as a dead energy source, yet it is back in vogue across many parts of the world. Despite being the lowest in BTU value, it carries perhaps the lowest geopolitical risk, and that security of supply has revived its appeal.
A Bright Future for Natural Gas and Propane
The broader energy picture — encompassing natural gas and propane alongside crude — looks genuinely promising, and not only because of the price spikes driven by Middle East conflict. The deeper story is one of surging demand from energy production itself and from the massive build-out of data infrastructure that needs reliable power.
The U.S. natural gas and natural gas liquids market, of which propane is a major component, is completely robust. Two recent deals illustrate the momentum. In the span of 24 hours, Chevron and Microsoft teamed up on a strong data center deal in the Permian Basin — a clear win-win for both companies. Separately, the Japanese energy group JERA returned to the U.S. market with a $3 natural gas deal tied to an unnamed data center.
The propane industry stands to reap the downstream benefits of this build-out. Natural gas is likely to supply much of the power generation for these data centers directly. But there is a long chain of demand stretching from the residential consumer all the way up to the data center customers, and the commercial and industrial facilities sitting in between will increasingly turn to propane-produced power. This is, in short, an exceptional time to be a U.S. citizen benefiting from the nation's natural gas and propane dominance. The vision of cleaner, cheaper energy is playing out much as anticipated, perhaps even ahead of schedule.
The Price Outlook: A Tight $75–80 Range
Looking ahead, the key question is whether crude returns to $80 and stabilizes there. At $80 a barrel, oil is not especially elevated on a historical basis, and the economy can comfortably sustain that level. Provided geopolitics stays tamped down, the current range of $75 to $80 looks like the right zone. Notably, oilman Harold Hamm has argued that $75 is too low and that the proper number is closer to $80. Either way, that is a fairly tight band, and it is likely where prices will sit for the next six months.
If the global system gets resupplied, prices could drift even lower. Nothing on the immediate horizon threatens to push them higher. China has demonstrated a striking ability to tamp down its own demand when needed — it holds tremendous storage, has shown a willingness to draw on it, and can pivot to alternative fuels including solar, coal, and nuclear. The largest consumers, in other words, exhibit considerable restraint precisely when prices fall. In the United States, the shock also prompted noticeable conservation, with people choosing to drive less and use less energy.
Taken together, these dynamics point to a consistent $75 to $80 crude price, which implies gasoline staying roughly where it is today, over the next six months. Seasonally, the market is entering summer, when natural gas may peak for air conditioning and power generation. For the propane industry, attention now turns to the coming winter and the agricultural situation, neither of which presents anything particularly dramatic at the moment. The next meaningful move in propane prices will likely come between now and fall, driven by the next round of winter weather forecasts.
