MW It's like the Sun exploding: One Wall Street firm fears $200 oil - and says it's not too late for investors to prepare
By Steve Goldstein
Citi says a continued disruption through the end of June could take oil to unparalleled levels
The supply disruptions, according to one client at Citi, are akin to the Sun exploding.
The fighting continues in the Middle East, and oil's back on the move, as the clock ticks on President Donald Trump's five-day deadline for resolving differences with Iran.
That's the backdrop for Wall Street giant Citi's 165-page opus on the global commodities outlook, written by strategists led by Maximilian Layton.
"We posit that the ongoing loss of energy supply to [the] global economy is so large (larger than the shocks of the 1970s as a share of oil supply) that it simply must be solved, either militarily or diplomatically, and that through various potential channels this occurs by mid-late April," they said.
That said, they expect things to get worse from here - Brent (BRN00) rising to at least $120 per barrel over the coming month. And in a scenario where there's a prolonged disruption through the end of June, oil prices could sky upward to some $200 per barrel "all-in," meaning crude oil plus consumption-weighted oil-product premiums. They come up with that number based on the typical relationship between inventory and price, given the world is now without 13.5 million barrels per day, taking out some 400 million barrels per month, due to Strait of Hormuz disruptions.
The firm answers the question of why risky assets have held their own - the S&P 500 SPX is only about 5% from its January highs - despite crude-oil and product expenditure soaring to a $4.6 trillion annualized rate, from $2.6 trillion in January.
"We note (eerily) that it took major risk-exposed assets more than a month to figure out COVID was bad, and it took it even longer for them to figure out Russia/Ukraine was bad," they said. They said one client mused that the supply shock is like the Sun exploding - there's still calm for the eight minutes it takes for the light to reach the Earth.
They do give a 20% probability to a quick Iran-U.S. deal where the Strait of Hormuz re-opens, that would send crude prices down to between $65 and $70 by year end.
They say it's not too late to hedge upside risks to global inflation with commodities, noting that the Bloomberg Commodity Index is only up about 10% since the conflict began.
Their other big talking point was gold, arguing the question is not if but when to buy the yellow metal. "One might have thought that the potential for the largest inflation shock in 50 years might have seen gold increase," they said.
The time to buy gold (GC00), they argue, is path rather than price dependent. Should the conflict end over the next four to six weeks, then the time to buy would be when equities bottom. Should the conflict last longer, the buy signal could be when inflation-adjusted interest rates start falling or when gold prices put in a technical turn in their momentum.
The markets
U.S. stock futures (ES00) (NQ00) wavered after a strong rally on Monday. Oil futures (CL00) were climbing. The yield on the 10-year Treasury BX:TMUBMUSD10Y rose 3 basis points to 4.37%.
Key asset performance Last 5d 1m YTD 1y S&P 500 6581 -1.77% -3.75% -3.86% 14.10% Nasdaq Composite 21,946.76 -1.91% -3.01% -5.57% 20.66% 10-year Treasury 4.373 17.00 33.50 20.10 5.20 Gold 4415.6 -11.89% -14.44% 1.93% 45.91% Oil 90.88 -5.35% 37.53% 58.30% 31.33% Data: MarketWatch. Treasury yields change expressed in basis points
The markets
The Wall Street Journal reported that U.S. allies in the Persian Gulf are moving closer to joining the fight in Iran.
The economics calendar includes the flash release of purchasing managers indexes for March, an indicator of how companies are reacting to war in the Middle East.
A $69 billion auction of 2-year notes is ahead.
Jefferies Financial $(JEF)$ rose in premarket trade after the Financial Times reported Sumitomo Financial Group was considering a takeover.
Estee Lauder $(EL)$ confirmed merger talks with Puig (ES:PUIG), after the stock sank on a report of its interest in buying the Charlotte Tilbury skincare maker.
GameStop $(GME)$ and KB Home (KBH) report results after the close.
Best of the web
Traders placed $580 million in oil bets ahead of Donald Trump's social media post on Iran talks.
The same Polymarket trader who predicted the start of the Iran war is now betting on a cease-fire by next week.
Red Lobster's last gasp.
The chart
It's an old stock market - as in, the companies are long in the tooth (we'll put aside the age of investors). An analysis by Owen Lamont, a portfolio manager at Acadian Asset Management, finds a geriatric stock market is a good thing. "Markets with many young firms tend to be overvalued, because private firms rush to go public to take advantage of high equity prices," he writes. When the percentage of the stock market's total capitalization has a listing age of under three years, the subsequent five-year returns struggle.
Top tickers
Here were the most active-stock tickers on MarketWatch as of 5 a.m. Eastern.
Ticker Security name NVDA Nvidia TSLA Tesla AMZN Amazon.com GME GameStop TSM Taiwan Semiconductor Manufacturing Co. MU Micron Technology PLTR Palantir Technologies NIO Nio MSFT Microsoft AAPL Apple
Random reads
Ads are popping up on the fridge, and it isn't going well.
Ruth's Chris Steakhouse has a dress code. The requirements at Chili's aren't as demanding.
Brazil's UFO capital marks 30 years since alleged alien encounter.
BEYOND THE NEWSROOM
MarketWatch Picks: More homes are for sale now than in 2025 - and median list prices are down 2.4%. Is now the time to buy?
-Steve Goldstein
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 24, 2026 06:37 ET (10:37 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.