Despite the shockwaves the latest conflagration sent across the financial markets, ChatGPT’s advanced artificial intelligence (AI) estimates that a relative price stabilization for oil is the most likely scenario for March.
Specifically, despite official confirmation being somewhat lacking, a series of bombings of ships attempting to cross the critical Strait of Hormuz indicates Iran has made good on its long-standing threat to close the waterway in case of an American or Israeli attack.
The shipping disruption – paired with attacks on parts of the energy infrastructure in the Arabian Peninsula – led, by press time on March 2, to significant volatility in the commodity markets. WTI and Brent are up approximately 7% in the daily, and 9-10% up in the weekly charts.
WTI and Brent Crude one-week price charts. Source: TradingViewUnder the circumstances and with gas prices in the E.U. reportedly already jumping more than 20%, Finbold decided to consult the AI of ChatGPT about what might happen to oil through the rest of March.
ChatGPT outlines the likeliest Oil price path in March
After acknowledging the latest disruptions resulting from the conflict in the Middle East, OpenAI’s flagship model swiftly plotted three scenarios for oil in March that it deemed most likely.
The first course ChatGPT plotted was the lowest in severity. Within this scenario, the AI estimated that, following the initial shock and disruption, producing nations and shipping companies are likely to adjust their targets and reroute shipping along alternative shipping lanes such as around Africa.
Under such circumstances, ChatGPT estimates that prices are likely to remain elevated but, after the initial reports have been absorbed, not rocket above the $75 to $85 range for WTI and $85 to $95 for Brent. The AI assigned this scenario a probability of 50%.
ChatGPT models the most likely oil price scenario in March. Source: Finbold & ChatGPTChatGPT weighs in on other likely Oil price March scenarios
Scenario labeled as ‘high-risk’ and estimated at a 30% probability would see producing nations reduce output due to ‘logistical bottlenecks’ – perhaps infrastructure damage, though the AI failed to clarify – and hostilities escalate even further.
Should this then lead investors to increase their hedging against risk, ChatGPT foresees that oil prices might find themselves between $95 and $105 per barrel at the end of March.
ChatGPT models a more severe oil price scenario in March. Source: Finbold & ChatGPTElsewhere, AI’s worst-case scenario – estimated at 20% odds of occurring – would send the commodity prices above $120 and would be the result of severe infrastructure damage combined with a situation that escalated far enough that no diplomatic off-ramps are credible.
It is worth noting that Iran launched an attack on Saudi Arabian oil fields in the morning of March 2, additional missiles against Gulf Arab nations, and that the country’s foreign minister allegedly dismissed the possibility of negotiation with the U.S.
ChatGPT models the most severe oil price scenario in March. Source: Finbold & ChatGPTLastly, ChatGPT highlighted that oil markets tend to react to uncertainty and that, thus, once the situation for global oil production and shipping becomes clearer, prices are likely to stabilize even if the exchange of bombs and missiles continues.
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Source: https://finbold.com/we-asked-chatgpt-what-will-happen-to-oil-in-march-amidst-hormuz-strait-closure/
