What does the loss of the 2026 hydrocarbon surplus mean for investors? TotalEnergies recently indicated that the ongoing conflict has eliminated its anticipated hydrocarbon surplus for 2026. This development has led to a heightened probability of crude oil prices reaching $90 by the end of June, with market indicators on Polymarket reflecting a 25% increased likelihood of this scenario.
Shifts in global oil prices have occurred due to the elimination of the surplus expectation, which suggests a tightening supply chain. TotalEnergies has reported significant supply disruptions caused by the closure of the Strait of Hormuz, a critical waterway that accounts for approximately 20% of global oil transit. With only 62 days left until potential resolutions, increased volatility in oil prices is anticipated.
On the geopolitical front, the recent appointment of Ali al-Zaidi as Iraq’s new prime minister has heightened tensions rather than alleviating them. A market analysis shows that the probability of a ceasefire between the U.S. and Iran has drastically decreased, with analysts observing only a 2.7% chance — a significant drop from 14% just a week prior. Al-Zaidi’s alignment with U.S. interests and his appointment under U.S. pressure signify ongoing conflict rather than de-escalation.
Market activity shows that traders are responding swiftly to these geopolitical developments. The trading volume for the ceasefire market stands at $70,162 in actual U.S. dollars, with a notable spike recorded at 11:40 a.m. This thin market indicates that only $1,096 is required to shift prices by 5 points, proving that individual trades can substantially influence pricing dynamics.
The absence of expected oil surplus indicates tighter supply, consequently exerting upward pressure on crude oil prices. A YES share for crude oil reaching $90, currently priced at 25 cents, could yield a fourfold return as it pays $1 upon resolution. Disruptions in the Strait of Hormuz, coupled with rising geopolitical tensions, further constrain supply availability.
Investors should remain vigilant for upcoming OPEC+ announcements and the evolving status of the Strait of Hormuz. Additionally, ongoing U.S. diplomatic efforts and Iraq’s political developments could result in further market fluctuations.