Learning From the Miss
- Forecast date: 22 March 2026
- Target date: 27 March (Friday close)
- Current price: Brent $106.41 (March 20 close)
The Forecast
- Point estimate: $108.16
- 50% confidence interval: $103.48 – $112.58
- 68% confidence interval: $100.97 – $115.13
- 90% confidence interval: $93.97 – $124.22
Naive baseline comparison: $106.41 (current price as prediction)
This is a fundamentally different forecast from Week 1. The point estimate is $108.16, only $1.75 above the current price. Week 1 predicted a $21.25 jump. Week 2 predicts a $1.75 drift.
That's not timidity. That's the model incorporating what it learned: this war produces spikes that get managed back down, not sustained price ramps.
Scenario Probabilities
| Scenario | Week 1 | Week 2 | Change | Why |
|---|---|---|---|---|
| Escalation | 45% | 42% | −3 | Still dominant, but split into sustained (40%) and spike-and-recovery (60%) sub-scenarios |
| Stalemate | 25% | 30% | +5 | $100–110 range held all week despite multiple escalation events |
| De-escalation | 15% | 10% | −5 | Both sides publicly locked into new escalation commitments |
| Demand Destruction | 10% | 11% | +1 | IEA releasing 400M barrels, BoE pricing two rate hikes |
| Black Swan | 5% | 7% | +2 | Iran demonstrated intercontinental capability; nuclear sites now explicitly on targeting lists |
Weight Adjustment Note
These weights were initially set at Escalation 38%, then adjusted upward to 42% after Iranian Parliamentary Speaker Ghalibaf publicly declared energy infrastructure "legitimate targets" to be "destroyed in an irreversible manner." Tasnim state media simultaneously reported nuclear sites are "among targets" if power plants are attacked.
When both sides publicly commit to hitting energy infrastructure on the same afternoon, de-escalation gets harder.
What's Different About This Model
The big change: escalation is no longer one scenario.
Week 1 treated all escalation the same. A sustained ramp toward $135. Reality showed something different. Prices spike on events, then get pulled back by diplomatic intervention and strategic reserves. So Week 2 splits escalation into:
- Sustained escalation (40% of escalation): Trump follows through on his ultimatum, Strait stays closed, prices ramp and hold. Average outcome: ~$115
- Spike and recovery (60% of escalation): Event-driven spikes that partially reverse within 24-48 hours. This was the dominant Week 1 pattern. Average outcome: ~$112
The spike and recovery sub-scenario is weighted higher because Week 1 proved it's the more likely mode. Three separate spikes, three separate recoveries, all in one week.
The $110 ceiling is now explicit. Stalemate includes hard floor ($100) and resistance ($110) with mean-reversion. The ceiling isn't a guess. It was tested three times in Week 1 and held each time.
The Monday Question
Everything about this forecast could be wrong by Monday afternoon.
Trump issued a 48 hour ultimatum on Saturday evening: reopen the Strait of Hormuz or he'll "obliterate" Iranian power plants, "starting with the biggest one first." The deadline expires approximately Monday 23:44 GMT.
Iran has zero chance of complying. So either:
- Trump follows through → massive escalation, $110 ceiling breaks, this forecast undershoots badly
- Trump backs down → credibility hit, but prices stay range-bound, forecast holds
- Something in between → targeted strikes, Ghalibaf's retaliation promise activates, spike and recovery pattern continues
The MAGA base is fracturing over this war. A Day 1 Trump supporter called for impeachment this week. The NCTC Director resigned citing Israel lobby pressure. Tucker Carlson's audience is against it. These are real political constraints on following through.
But Ghalibaf's statement this afternoon works the other way. Iran's parliamentary speaker publicly authorising "irreversible destruction" of energy infrastructure isn't rhetoric. It's a new targeting category from a political leader, not a military one.
Both sides are locked in. The question is whether the lock holds or someone blinks.
What I'm Watching This Week
- Trump ultimatum deadline (Monday ~23:44 GMT). Action or rhetoric?
- Strait of Hormuz shipping. Any vessels attempting transit?
- Energy infrastructure strikes. Does Ghalibaf's declaration translate into action?
- IEA reserve releases. How quickly do strategic reserves reach the market?
- BoE and ECB signals. Rate hike expectations compounding demand side pressure?
Where I Could Be Wrong
-
Too conservative: If Trump follows through on the ultimatum and Iran retaliates against energy infrastructure as Ghalibaf promised, $108 will look absurdly low. The 90% CI upper bound of $124 becomes the target.
-
Too aggressive: If the ultimatum is pure rhetoric and the Strait quietly starts reopening, prices could drop toward $100 or below. The de-escalation scenario at 10% might be too low.
-
Stalemate overweighted: If the war is genuinely escalating (not cycling), the $100-110 range could break in either direction. The ceiling held in Week 1. But Week 1 didn't include explicit threats to destroy energy infrastructure permanently.
The Skill Score Challenge
Week 1's skill score was -0.83. The naive baseline won easily. To beat it this week, the actual price needs to land closer to $108.16 than to $106.41. That means I need the actual to move at least $0.88 above $106.41 (to $107.29 or higher).
I'm essentially betting that prices drift slightly upward, that the escalation pressure outweighs the recovery pressure by a small margin. If prices close flat or down, the naive baseline wins again.
Two consecutive weeks losing to "do nothing" would be a serious signal that the model is adding complexity without adding accuracy.
Forecast locked March 22, 2026. No edits after publishing. You can find the live dashboard here.
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