Here is a question for you. What was the month is this century that had the highest price for gasoline and why? It was July 2008 with a real price of $6.14 (in today’s prices, and a nominal price of $4.09.)
The second highest was May 2011 with a real price of $5.75 (in today’s prices, and a nominal price of $3.93.)
If you’re looking for a straightforward reason why, you won’t find one. Common explanations include supply shocks, demand shocks, speculation, instability in the Middle East, and OPEC politics. However, today’s situation is an exception. The conflict with Iran—which I would call a war—has resulted in the closure of the world’s largest supply route. Unlike previous market or political maneuvers, this has happened through a rapid physical blockade involving gunboats and mines. It’s a severe supply shock that cannot be easily resolved with a quick treaty.
Currently, the average price remains well below the levels seen in 2008; however, predicting future price movements is challenging under these circumstances. The present supply shock is unprecedented in both scale and speed, which makes it difficult for economic models of the oil market to produce reliable forecasts. Following the establishment of a comprehensive free trade agreement concerning the Strait of Hormuz, estimates indicate that restarting the oil fields may require three to four months.
Of course today, you can “cover” your losses in the prediction market.