How Long Can Markets Survive The Energy Crisis? Experts Reveal What's Next
Speakers
Christopher Mullen -- Chief Market Strategist at The Technical Traders
— Chopping Block co-host
Summary
- The Strait of Hormuz has been closed by Iran following US/Israel attacks, halting 20% of global crude supply and spiking WTI from $77 to $119.
- A significant analyst split exists: Bulls (e.g., Josh Young) project inflation-adjusted all-time highs (~$200+ oil) due to a prolonged physical supply shock with no quick fix.
- Bears (e.g., Bubba Horowitz, Christopher Mullen) view the spike as a fear-driven, parabolic rally within a long-term bear market, noting the 1-year WTI futures trade at $69, signaling an expectation of a sharp reversal.
- A secondary crisis is predicted in US Treasuries (Luke Groman), as oil-importing Asian nations may be forced to sell financial assets to pay for physical energy, turning a natural buyer into a seller.
- Asia (Korea, Japan, Thailand, Philippines, India) is identified as the most exposed region, receiving ~90% of Hormuz oil, while the US is relatively insulated due to energy self-sufficiency.
- China is seen as relatively resilient due to massive prior investments in solar/wind and EV adoption, cushioning the blow from losing access to Venezuelan and now Iranian oil.
- The IEA's 400-million-barrel strategic reserve release is estimated to only cover a 10-14 day global shortfall, highlighting the scale of the disruption.
- From an equity perspective, the energy sector was considered deeply undervalued prior to the crisis (e.g., Exxon Mobil modeled on $65 oil), with the geopolitical event serving as a catalyst.
- Structural factors today (lower global oil intensity, higher US production) make the crisis less severe than the 1979 shock, but the immediate timing and physical disruption are acute.
- Technical analysts point to oil's long-term downtrend and view the news-driven gap as a likely capitulation/exhaustion move that will fade.
Trade Ideas
Speaker states if the Strait of Hormuz closure does not resolve soon, "we should see all-time high oil prices" on an inflation-adjusted basis, referencing 2008's $147 level adjusted to "$200 plus." The Strait carries 1/5 of global crude; Iran's blockade is effective with no quick diplomatic/military solution, causing the physical market price to ratchet up 5-8% per day. The physical supply shock is severe and enduring, with price momentum signaling a continued grind higher toward historical cyclical extremes. A swift political resolution reopening the Strait, or a successful military operation to secure the passage.
Speaker argues oil-importing nations that hold US Treasuries "will have to sell those financial assets to secure physical energy," turning a "huge natural buyer of treasuries turn seller." The world needs physical oil and food more than financial assets during a supply disruption; countries will prioritize securing commodities over holding bonds. The energy crisis creates a fundamental, price-insensitive seller of US government debt, pressuring prices lower (yields higher). The Strait of Hormuz reopens quickly, negating the sustained pressure on importers' balance of payments.
Speaker cites Exxon Mobil's 2030 business plan based on $65 oil and states "if $65 oil happens, this is the cheapest stock in the S&P 500." The stock was undervalued even before the crisis based on conservative oil price assumptions. The geopolitical event adds a further catalyst but doesn't change the fundamental valuation math. At current or even moderately lower oil prices, XOM's valuation is compelling, offering a margin of safety with optionality on higher energy prices. A sustained, deep collapse in oil prices well below the company's planning assumptions ($65).
Speaker states "the energy sector... was undervalued" and it is "another reason to kind of overweight energy stocks." The sector was the most undervalued and underowned in the S&P before the crisis. Geopolitical risk is generally underpriced in commodities, and this event highlights the sector's strategic importance. The sector offers attractive valuation and represents a prudent overweight, especially given heightened global supply risks. A rapid and lasting resolution to the crisis that removes the geopolitical risk premium and refocuses the market on long-term demand concerns (e.g., energy transition).
Up Next
This The David Lin Report video, published March 18, 2026, features Josh Young, Luke Gromen, Danny Moses discussing WTI, TLT, XOM, XLE. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Josh Young, Luke Gromen, Danny Moses · Tickers: WTI, TLT, XOM, XLE