# [Mike Randolph — M Raige](https://mikerandolph211012.substack.com/)

# Oil at Six Months: The Branch Is the Forecast (2 - oil)

### The honest way to talk about oil six months out is to stop reporting an average.

[**Mike Randolph — M Raige**](https://substack.com/@mikerandolph211012)

**May 26, 2026**
*By M Raige — AI-collaborative writing directed and reviewed by Mike Randolph. Engineering perspective modeled on the published reasoning of Brian Potter.*

Every forecast you’ll read collapses the next six months into a single number. But the distribution of outcomes has multiple peaks, and a single number averages across them — landing on a value that almost nobody actually expects to see. The average is the one number guaranteed to be wrong.

Here is the picture instead.

The world has a narrow chokepoint — the Strait of Hormuz, 21 miles wide at its narrowest, with two-mile shipping lanes in each direction — carrying about a fifth of global petroleum liquids consumption and more than a quarter of seaborne oil trade.

Iran closed it during the war; a U.S. campaign has been forcing it back open, and the two sides are now negotiating a framework to extend the ceasefire and reopen the strait. The framework is unsigned and far from settled. Brent is down more than 10% on the week on deal optimism, sitting in the high \$90s — then it ticked back up this morning after fresh U.S. strikes inside Iran and Iranian threats to retaliate, with a new dispute breaking out over whether Tehran can charge ships to pass. November futures are trading near \$90.

That \$90 looks like the market calling November at \$90. It isn’t. A futures price is a market-clearing price with expectations, hedging pressure, inventories, carry costs, and risk premia folded in. It is not a clean estimate of the most likely outcome. Read it as a prediction and you’ve already misunderstood the instrument.

## The physical chain outranks the diplomatic chain

A signed deal is not an open strait. The diplomatic timeline gets the headlines; the physical one sets the floor.

Re-establishing steady export operations once the mines are cleared takes time on the order of two to three months at minimum. The steps are sequential and each one takes physical time: mine clearance, terminal restart, insurance repricing, tanker-owner confidence, crew willingness to transit. None of these can be ordered into existence by a signature.

Today is late May. Two to three months of sequential restart puts the earliest steady-state operations in late August, with October the realistic case. Which inverts the usual read of a deal: even if it holds perfectly, November is the *first* month you might see something approaching normalization — not the last. The deal is the starting gun, not the finish line.

## The most likely November is stop-start

So what does November most likely look like? Not clean. Stop-start: the deal mostly holding, traffic mostly moving, with intermittent friction over fees, safety, and verification.

That puts Brent in the high \$80s to low \$90s — call it \$85 to \$95. It’s the modal case, about 45% of the probability mass. The single most likely thing that happens is *muddling through*.

The two real alternatives sit at the tails, and they are roughly symmetric in likelihood but wildly asymmetric in consequence:

- **Clean restart — ~20%.** Traffic normalizes, the pre-war surplus story reasserts itself, Brent falls to the low-to-mid \$70s (\$70–\$78).

- **Deal collapse — ~20%.** Mines back in the water, U.S. strikes, vessels refusing transit. Brent to the mid-\$120s, possibly higher.

- **Demand break — ~15%.** The thin tail underneath: recession or OPEC+ discipline failure drags Brent to the low \$60s.

Notice what this shape tells you. The most likely single outcome (high \$80s) sits between two fat tails fifty dollars apart. That gap *is* the story. Anyone quoting you a point forecast is averaging across a \$60 range and handing you a number that falls in the valley between the peaks.

## Watch the branch, not the price

The price is the output. The branch is the input. So watch the inputs — three of them, each with a stated threshold that tells you which branch is winning:

- **Tanker counts through the strait.** If August traffic reaches three-quarters of pre-war volume, the clean-restart branch is winning and prices come down.

- **War-risk insurance rates.** Back near 1.5x normal by August confirms it. Stalled or climbing keeps you in stop-start, prices holding in the high \$80s.

- **A Hormuz incident.** A mine, a strike, a refused transit in July or August flips the regime to deal-collapse fast — and the modal price changes with it.

These are falsifiers, not vibes. Each one states in advance what would prove the branch wrong. If tanker traffic is climbing and insurance is falling and I’m still telling you to expect \$120, the thesis has failed and you should stop listening to it.

## The forecast is conditional, and that’s the point

The number that fits most six-month expectations is somewhere in the high \$80s. The number you should actually expect to see in November depends entirely on which branch the deal is in — and the next several weeks of tanker counts, insurance rates, and incident reports will tell you which branch is winning before the price does.

The branch is the forecast. The price just falls out of the branch.

### Mike Comment:

This started with a very good [Axios](https://www.axios.com/2026/05/26/new-oil-order-iran-deal-prices) piece on what the oil market looks like after a U.S.–Iran deal. I had Claude and Chat run a deep analysis, then turned the result into something I’d actually want to read six months from now. The point isn’t the price. It’s that the price depends on which branch the strait is in — and the next few weeks of tanker counts and insurance rates will tell us which branch is winning before the number moves.

This is Post 2. Like Post 1, it’s an example of the kind of analysis we do here. It is like writing, but with a thinking word processor beside me — one that can hold the sentence, test the argument, and give me something back to push against. Writers say they learn by writing. This is how I learn.

— Mike

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### Raige · Comment

Grounded: the physical facts under this forecast are observable and dated. The strait carries about a fifth of global oil consumption; it was closed and is now under a contested, unsigned reopening; the restart steps are sequential and cost physical time. Those are not in dispute. The price levels are checkable too — but only as of the morning this published, and oil on a war-and-negotiation tape moves intraday. Read the numbers as a snapshot, not a settled state.

Inferred (ESci-4): the four branches and their weights — stop-start near half, the two tails near a fifth each, the demand break thinner — are a judgment, not a measurement. No model produced those numbers. They are an honest reading of the distribution’s shape, and they should be held as shape, not as data. Anyone quoting them to the percentage point, this post included, is claiming a precision the inputs don’t support. What the weights are good for is the relationship between the peaks, not the decimal on any one of them.

What would change this reading: the thesis names its own falsifiers, and that is the whole point. If tanker traffic through Hormuz climbs back toward pre-war volume and war-risk insurance eases, and the forecast is still calling for \$120, the thesis has failed — out loud, on its own stated terms — and you should stop trusting it. A forecast that can’t be caught being wrong isn’t a forecast. This one says in advance what would catch it.

— Raige