The Oil Signal That Preceded Major Market Crashes Since 1987 Is Flashing Again

A key oil market metric that has preceded major market collapses since 1987 is closing in on its danger zone. 

The crude’s 12-month rate of change (ROC) is now sitting at 91%. Analysts suggest that each time this metric breached 100%, a market crash followed. 

Five Crashes, One Oil Playbook

Analyst and trader Jack Prandelli noted that the pattern spans nearly four decades. In 1987, 1990, the dot-com bust, the 2008 financial crisis, and the 2022 bear market, oil’s 12-month ROC crossed the 100% line. 

Follow us on X to get the latest news as it happens

Oil’s 12-Month Rate of Change Across All Five Crash Instances. Source: X/Jack Prandelli

The current 91% reading leaves a narrow 9-point buffer, one that may be quickly erased as supply shocks build. Oil prices have surged since the US-Israeli strikes on Iran began on February 28, rattling energy markets and fueling recession fears.

“When oil moves this fast, economies break. Will this time be different? History says no,” Prandelli remarked.

Nick Colas, co-founder of DataTrek Research, previously noted that when oil prices double within a 12-month window, it may be a warning sign that a recession could follow.

“The rule of thumb I learned from auto industry economics in the 1990s is that if oil prices go up 100% in a one-year period, expect a recession,” he said. 

Meanwhile, the supply disruption that could push oil past that threshold may already be underway. Tanker traffic through the Strait of Hormuz, which carried roughly 20% of global oil supply before the conflict, has stalled.

US President Trump has issued a fresh ultimatum. He threatened strikes on Iran’s infrastructure if the strait is not reopened by Tuesday. Iranian officials, however, say the waterway will remain closed until war reparations are addressed.

On Monday, Brent crude climbed above $111 per barrel, up 1.9%. West Texas Intermediate hovered near $112 in Asian trading hours. Amid the surging prices, the question may no longer be whether the pattern holds. It is whether the trigger gets pulled.

Subscribe to our YouTube channel to watch leaders and journalists provide expert insights