Crude Oil Price Reaction History

Fear drives the initial move.
But what happens after the headlines fade?

This week’s shaping up to be a weird one:

  • We’ve got the Iran-Israel conflict playing out as we speak.
  • FOMC on Wednesday.
  • Market holiday on Thursday.
  • Some options expire on Friday.
  • Oh, and don’t forget tariff news dropping in at random!

As I’m writing this, US futures are green, crude gapped higher Sunday night… and then rolled back over.

I haven’t traded much crude lately, but with it in play, I did some digging.

Let’s talk history:

OIL SPIKES

Oil Spikes on Conflict… But Then What?

Here’s how oil reacted to past geopolitical shocks:

9/11 Attacks (2001)

 🛢️Brent crude jumped +5% immediately
📉Then dropped -25% within 2 weeks as recession fears kicked in

Russia Invades Ukraine (Feb 2022)

🛢️ Oil surged +30% in 2 weeks
📉 Fully retraced within 8 weeks

Iraq Invades Kuwait (1990)

🛢️ Initial oil spike, equities fell
📉 Markets stabilised in months

1973 Oil Embargo (exception)

🛢️ Major supply shock
📈 Oil prices stayed elevated
📉 Global equities down sharply even 12 months later

So what’s the real takeaway?

  • Short-term fear = oil spike
  • Medium-term = demand destruction, snapback
  • Only real supply shocks (like 1973) have lasting macro damage

It’s also worth noting:

Iran produces ~3.3 million barrels/day. Global demand? Around 100 million.

And Gulf states can ramp up supply quickly to fill any gap.

So while anything can happen, crude reacts differently to shocks than equities, the supply/demand mechanics are more flexible, and fear-based moves often unwind fast.

Anyway, no opinions or calls, just a bit of macro perspective to start your week.

Let’s see how everything unfolds.

Keep it managed.