Global Oil Market Shock & Geopolitical Risk Scenario Modeler

Dynamic crude price elasticity model based on Middle East tensions, Hormuz chokepoint risks, and SPR buffers.

Shock Scenarios:

Simulation Parameters

Supply Disruption (Gross) 3.50 mbpd

Crude production offline due to regional military or chokepoint actions.

Strategic Petroleum Reserve (SPR) 1.50 mbpd

Emergency coordinated reserve releases (IEA / US SPR mitigation).

Geopolitical Risk Index (GRI) 88 / 100

Escalation index reflecting insurance rates, tanker attacks & rhetoric.

Sanctions Intensity Factor 0.85

Secondary sanctions enforcement friction on dark fleet exports.

Baseline Brent Price $78.50 / bbl

Pre-shock structural market equilibrium clearing price.

Desk Assessment

Severe Deficit / Extreme Volatility

⚠️

Projected Brent Price

$114.20

+$35.70 (+45.5%) vs Base

Net Market Deficit

2.0 mbpd

Disruption - SPR Release

Volatility Index

92.4

Critical High Range

Geopolitical Premium

+$13.70

Risk & Sanction Markup

Mean Projected Brent Trajectory

±1σ Geopolitical Volatility Band

±2σ Shock Boundary

Baseline Equilibrium

Inelastic Short-Run Supply Curve Global crude demand exhibits low short-term price elasticity (-0.05). Physical disruptions cannot immediately be bridged by OPEC spare capacity due to infrastructure lag and strategic reservation.

Geopolitical Risk Multiplier The model weights insurance freight spikes, dark-fleet interdictions, and regional escalation indicators beyond pure physical barrel counts to mirror trading desk risk premia.

SPR Counter-Buffer Dynamics Emergency releases from the US Strategic Petroleum Reserve and IEA members provide immediate barrel relief, softening peak spikes before secondary refinery bottlenecks emerge.