At this stage, diplomacy headlines are secondary.

The market is increasingly trading physical risk, not rhetoric.

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1. What actually moves oil now

There are two layers:

Layer 1: Headlines (short-term noise)

Deadlines, threats, counterproposals

Cause intraday spikes and reversals

We already see this:

Oil swings around $110 depending on news flow 

Markets still expect delays or partial de-escalation 

→ This is volatility, not trend.

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Layer 2: Physical supply risk (real driver)

This is what matters:

Strait of Hormuz = ~20% of global oil supply 

Disruptions already tightening flows and raising prices 

Supply chain damage spreading across Asia 

→ This is what creates sustained price moves

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2. Is $110 panic… or just the beginning?

Base case (current pricing):

$100–110 = “risk premium” zone

Market pricing:

Partial disruption

Eventual reopening / mitigation

Goldman estimates ~$14 geopolitical premium already embedded 

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If nothing worsens

Oil likely stabilises or drifts lower

$110 becomes a local ceiling

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If disruption persists or escalates

Then $110 is not the peak, it is the floor shift

Credible paths:

$120–150 → sustained disruption

$150–200 → prolonged Hormuz closure 

At that point:

It becomes a macro shock, not just energy volatility

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3. Key insight (this is the turning point)

Markets are transitioning from:

> “Will there be conflict?”

→ to

“How much supply is actually lost?”

That shift is critical.

Because:

Oil is priced on the marginal barrel

Even small supply losses → outsized price moves

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4. My read (practical, not sensational)

Right now

$110 = not full panic

Still room for repricing higher if physical flows worsen

Market mistake

Still underpricing duration risk

Assuming disruption is temporary

What changes everything

Watch for:

Sustained drop in tanker flow (not headlines)

Confirmed infrastructure damage

Strategic reserves failing to offset supply

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Bottom line

Diplomacy headlines = short-term volatility

Energy supply risk = actual trend driver

And at this moment:

> The market is not yet pricing a full energy shock

So no, $110 is unlikely the true panic peak

It is more likely:

> The midpoint of uncertainty