Analysis

The market's 10.5% probability for Crude Oil (CL) to hit $120 by end of March 2026 appears to underestimate significant upside potential. The timeframe extends over a year, ample time for high-impact, low-probability events to materialize. Several catalysts could drive prices past this level. Persistent geopolitical tensions in key producing regions (Middle East, Eastern Europe) carry a non-trivial risk of escalation or new conflicts that could severely disrupt supply. Given the ongoing underinvestment in new upstream oil projects globally, a sudden supply shock would find a market with limited spare capacity to absorb it. Furthermore, an unexpected global economic rebound, particularly from major energy consumers like China, could lead to stronger-than-anticipated demand growth. Coupled with potential OPEC+ decisions to tighten supply further to support prices, the combination of robust demand and constrained supply could easily push CL above $120. The current 10.5% seems low for such a volatile and geopolitically sensitive commodity over a 12-15 month horizon.