{"id":240999,"date":"2026-04-01T10:00:00","date_gmt":"2026-04-01T14:00:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=240999"},"modified":"2026-04-02T04:20:25","modified_gmt":"2026-04-02T08:20:25","slug":"oil-could-spike-to-372-per-barrel-in-worst-case-scenario-says-paul-krugman-crisis-is-about-to-get-physical","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/commodities\/oil-could-spike-to-372-per-barrel-in-worst-case-scenario-says-paul-krugman-crisis-is-about-to-get-physical\/","title":{"rendered":"Oil Could Spike To $372 Per Barrel In Worst Case Scenario, Says Paul Krugman: &#8216;Crisis Is About To Get Physical&#8217;"},"content":{"rendered":"\n<p>Nobel Prize-winning economist&nbsp;<strong>Paul Krugman<\/strong>&nbsp;is warning of a catastrophic&nbsp;<a href=\"https:\/\/www.benzinga.com\/markets\/prediction-markets\/26\/03\/51558701\/will-us-and-iran-blink-before-oil-hits-120-heres-what-prediction-market-is-saying\" target=\"_blank\" rel=\"noreferrer noopener\">global oil shock<\/a>, cautioning that impending physical shortages could drive prices as high as $372 per barrel and trigger a worldwide recession.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-end-of-grace-period\"><strong>The End Of Grace Period<\/strong><\/h2>\n\n\n\n<p>Despite current Brent crude futures hovering around $103 per barrel, Krugman warns that the market is severely underestimating a&nbsp;<a href=\"https:\/\/www.benzinga.com\/markets\/equities\/26\/03\/51534858\/wall-streets-getting-nervous-expert-warns-stocks-could-drop-25-if-150-oil-scenario-slams-markets-hard\" target=\"_blank\" rel=\"noreferrer noopener\">looming supply crunch<\/a>.<\/p>\n\n\n\n<p>In a&nbsp;<a href=\"https:\/\/paulkrugman.substack.com\/p\/the-oil-crisis-is-about-to-get-physical\" target=\"_blank\" rel=\"noreferrer noopener\">Substack<\/a>&nbsp;analysis, he noted that the initial price spike following&nbsp;<a href=\"https:\/\/www.benzinga.com\/news\/politics\/26\/03\/51559144\/us-iran-war-updates-march-31-no-oil-spill-from-kuwait-tanker-iran-arrests-two-over-data-leak-pakistan-flags-complex-peace-talks\" target=\"_blank\" rel=\"noreferrer noopener\">Middle Eastern disruptions<\/a>&nbsp;was largely speculative, buffered by oil already in transit at sea. However, with tanker deliveries to Asian markets ending this week and European deliveries halting the next, the situation is drastically shifting.<\/p>\n\n\n\n<p>\u201cThe oil crisis is about to get physical,\u201d Krugman wrote. Once the oil stops flowing, political \u201cjawboning\u201d will fail, and prices will be&nbsp;<a href=\"https:\/\/www.benzinga.com\/money\/best-oil-stocks\" target=\"_blank\" rel=\"noreferrer noopener\">forced to rise<\/a>&nbsp;to whatever level destroys enough demand to match restricted supply.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-372-worst-case-scenario\"><strong>The $372 Worst-Case Scenario<\/strong><\/h2>\n\n\n\n<p>Based on the historically low price elasticity of crude demand, Krugman modeled several potential price impacts.<\/p>\n\n\n\n<p>In his \u201chigh disruption\u201d scenario\u2014where global supply falls by 16% due to escalated conflicts, such as attacks on Iranian export facilities or Red Sea shipping\u2014coupled with low demand elasticity, oil prices could hit a staggering $372 per barrel.<\/p>\n\n\n\n<p>Harvard economist&nbsp;<strong>Jason Furman<\/strong>&nbsp;highlighted a massive disconnect regarding these projections. Furman noted on X that the market currently assigns a near-zero probability to Krugman\u2019s highest estimates, despite the models being rooted in fundamental economics.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-looming-recession-risks\"><strong>Looming Recession Risks<\/strong><\/h2>\n\n\n\n<p>Krugman stressed that assuming a moderate outcome is \u201cnot at all a safe assumption\u201d given the current trajectory of the war. He explicitly warned that if oil breaches the $200 mark, the world faces a \u201cfull-blown global economic crisis, with an inflation surge and quite likely a recession.\u201d<\/p>\n\n\n\n<p>While broader macroeconomic\u00a0<a href=\"https:\/\/www.benzinga.com\/trading-ideas\/long-ideas\/26\/03\/51572900\/warren-buffett-bet-big-on-oil-in-q4-heres-how-much-berkshire-hathaway-is-up-on-chevron-stock-in-2026\" target=\"_blank\" rel=\"noreferrer noopener\">experts remain<\/a>\u00a0somewhat sanguine, energy analysts tracking the physical supply are increasingly panicked. \u201cMy hair is definitely starting to smolder,\u201d Krugman concluded.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted April 1, 2026 &#8211; <a href=\"https:\/\/www.benzinga.com\/markets\/commodities\/26\/04\/51592532\/oil-could-spike-to-372-per-barrel-paul-krugman\">Oil Could Spike To $372 Per Barrel In Worst Case Scenario, Says Paul Krugman: &#8216;Crisis Is About To Get Physical&#8217;<\/a><\/p>\n\n\n\n<p><strong><em>Disclaimer:<\/em><\/strong><em>&nbsp;This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nobel Prize-winning economist\u00a0Paul Krugman\u00a0is warning of a catastrophic\u00a0global oil shock, cautioning that impending physical shortages could drive prices as high as $372 per barrel and trigger a worldwide recession.<\/p>\n","protected":false},"author":1578,"featured_media":146882,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,6,8,9,26,3],"tags":[],"contributors-categories":[13584],"class_list":{"0":"post-240999","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-commodities","8":"category-north-america","9":"category-region","10":"category-securities","11":"category-text-articles","12":"category-traders-insight","13":"contributors-categories-benzinga"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Oil Could Spike To $372 Per Barrel In Worst Case Scenario, Says Paul Krugman: &#8216;Crisis 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