Billionaire investor Paul Tudor Jones is betting that oil prices could rise by another $25 per barrel, and he warns that 2027 may prove to be an "extremely challenging" year for the U.S. stock market.

The founder of Tudor Investment Corp. said in an interview on Tuesday: "I'm long oil and I like the oil trade; I think oil can go another $20 to $25 higher." When asked how the stock market would respond, he replied: "The stock market would hate it — absolutely hate it."

Jones speculates that U.S. President Trump may take a tougher stance on Iran after the November 3 midterm elections. He believes that if a more moderate solution existed, it would likely have already surfaced. "It's like a sword of Damocles hanging over the oil market after the midterms," Jones said, while also acknowledging that he does not have inside information about Trump's plans.

Trump said last Thursday that the United States would not attack Iran before the election, while Tehran has been preparing for a possible new round of conflict. On Tuesday, U.S. WTI crude traded near $94. A $20 to $25 increase would push it to roughly $114 to $119; however, Jones did not specify a particular benchmark or time frame.

On the Kalshi platform, traders put the probability of WTI crude settling above $115 by December 31 at about 33%, and the probability of topping $120 at 26%.

Based on historical patterns during midterm elections — when stocks tend to bottom in late October or early November — Jones sees a "strong possibility" of a robust fourth-quarter rally. But he compared the current AI-driven, "two-speed" market to 1999, when tech stocks surged before the dot-com bubble burst. He warned: "2027 is going to be extremely challenging for the stock market."

His concern is not primarily about valuations, but about the supply of shares. For years, buybacks and acquisitions supported stock prices by reducing the number of shares outstanding, but initial public offerings (IPOs) and insider selling could reverse that trend. Jones said: "The flow situation in the U.S. stock market right now is probably the worst it's been since 2002."

Jones pointed to SpaceX as an example, noting that although the company went public in June, billions of shares are still held by insiders and early investors, and those shares are subject to lock-up restrictions until 2027. He also mentioned possible IPOs from Anthropic and OpenAI.

Jones worries that a combination of new listings and insider share sales could lead to an oversupply in the market, weighing on stock prices.

Goldman Sachs forecasts $600 billion in new share issuance next year, along with $1.7 trillion in previously restricted shares that could be cleared for sale. The bank noted that the resulting increase in share supply could be the largest since 2000. However, Goldman expects corporate buybacks to reach $1.7 trillion and believes many newly unlocked shares will not actually be sold. Contrary to Jones's view, the bank expects the stock market's upward momentum to continue.