I think this largely misses the point? The argument for higher oil prices going forward is that given the pace of inventory drawdowns, there will be a point at which shortages happen which will lead oil prices to sky rocket the, not before. Oil prices reflect fundamentals, not expectations. That South Korea substitutes Middle Eastern oil imports is irrelevant to this claim, and crucially doesn’t tell you how long they can keep doing it…
Great post Robin thanks. Do you think the same holds for fertiliser and other inputs that were stuck in the Gulf? I’m hearing a lot of concern about food inflation coming in the autumn
It would then be logical to conclude Trump is about to strike a hell of a deal with Iran. After all, the Iranians seem to be reaching the end of their rope, and he can just wait to squeeze them ever harder. The same people at the WH that have so brilliantly kept oil prices at bay via verbal interventions must be well aware of this windfall. Not sure what all the fuss among the Republicans on the Hill is about -- talk of US capitulating and the like.
For the commenters saying he "missed the point", his point is incredibly relevant for stock investors. The popular Vanguard All World ETF (VT) has country weights in SE Asia as follows:
Japan 5.8, China 3.0, Taiwan 3.0, Korea 2.3, India 1.7 - Total 15.8%.
These countries' stock markets lagged the rally in US equities after the initial ceasefire was declared due to fears around oil. Yet as Robin's analysis shows, they were all able to mitigate it almost completely and now their equity markets are reflecting that.
If I read this right, for one country, oil imports are down only 8% and everything seems to be just fine. Could this be because they are simply drawing down reserves? Or that price increases take awhile to destroy demand? Could it be that until reserves are depleted we are not really seeing the impact of this war yet? Further, 8% seems like a lot.
The current narrative for a possible future crude spike, if the war doesn't end, is the depletion of national and commercial reserves. I'm sure there is good data on each nation's reserves, but is there for commercial reserves? More info on this topic would be helpful.
Making Canada Gtrat Again. Do you think that as renewables become less expensive, more reliable, and more integrated into the economies of oil poor countries that these manufactured oil shocks will become less shocking? And aren't the only beneficiaries of the US ending many renewable construction projects only beneficial to one group, namely the oil giants?
I think this largely misses the point? The argument for higher oil prices going forward is that given the pace of inventory drawdowns, there will be a point at which shortages happen which will lead oil prices to sky rocket the, not before. Oil prices reflect fundamentals, not expectations. That South Korea substitutes Middle Eastern oil imports is irrelevant to this claim, and crucially doesn’t tell you how long they can keep doing it…
This analysis seems to be myopic and created to support the administration in this stupid human killing destructive war. The line that says the
American blockade is working is laughable.
Great post Robin thanks. Do you think the same holds for fertiliser and other inputs that were stuck in the Gulf? I’m hearing a lot of concern about food inflation coming in the autumn
It would then be logical to conclude Trump is about to strike a hell of a deal with Iran. After all, the Iranians seem to be reaching the end of their rope, and he can just wait to squeeze them ever harder. The same people at the WH that have so brilliantly kept oil prices at bay via verbal interventions must be well aware of this windfall. Not sure what all the fuss among the Republicans on the Hill is about -- talk of US capitulating and the like.
The ongoing conflict involving Iran and instability around the Strait of Hormuz have triggered a sharp surge in oil prices
with Brent crude approaching or exceeding $100 per barrel.
This is not just a market fluctuation.
It is a systemic shock.
The Strait of Hormuz alone carries around 20% of global oil supply,
meaning any disruption has immediate worldwide consequences.
The impacts are already clear:
Rising inflation pressures globally
Higher transportation and energy costs
Increasing food prices, driven by fuel and fertilizer costs
Greater financial market volatility
Excellencies,
This is how energy shocks spread:
A disruption in one region
becomes inflation in another,
and instability everywhere.
There is also a deeper concern.
If disruptions persist:
Supply shortages could intensify
Economic growth could slow further
And central banks may be forced to delay easing policies
This moment highlights a critical vulnerability:
The global economy remains deeply dependent on fragile energy supply routes.
The response must be strategic:
Strengthening energy diversification
Investing in resilient supply chains
Accelerating the transition to alternative energy sources
Because energy security is no longer just an economic issue
it is a matter of global stability.
The lesson is clear:
In an interconnected world,
conflict anywhere can become inflation everywhere.
Robin, please publish on global oil inventory drawdowns and current levels (vs historical #s and %s), thank you!
For the commenters saying he "missed the point", his point is incredibly relevant for stock investors. The popular Vanguard All World ETF (VT) has country weights in SE Asia as follows:
Japan 5.8, China 3.0, Taiwan 3.0, Korea 2.3, India 1.7 - Total 15.8%.
These countries' stock markets lagged the rally in US equities after the initial ceasefire was declared due to fears around oil. Yet as Robin's analysis shows, they were all able to mitigate it almost completely and now their equity markets are reflecting that.
You were a commodity analyst, and you aren't aware of the shut in barrels and the lack of traffic through Hormuz? Tell me you are joking?
If I read this right, for one country, oil imports are down only 8% and everything seems to be just fine. Could this be because they are simply drawing down reserves? Or that price increases take awhile to destroy demand? Could it be that until reserves are depleted we are not really seeing the impact of this war yet? Further, 8% seems like a lot.
OMG is this misinformed. Declaring victory early will really bite you in the rear.
The current narrative for a possible future crude spike, if the war doesn't end, is the depletion of national and commercial reserves. I'm sure there is good data on each nation's reserves, but is there for commercial reserves? More info on this topic would be helpful.
RB...stop letting facts get in the way of a good story. 😄. Thanks for the analysis.
Making Canada Gtrat Again. Do you think that as renewables become less expensive, more reliable, and more integrated into the economies of oil poor countries that these manufactured oil shocks will become less shocking? And aren't the only beneficiaries of the US ending many renewable construction projects only beneficial to one group, namely the oil giants?