Source: Fortune.com
Summary
The conflict in the Middle East is affecting global energy markets, with multiple chokepoints and shortages emerging. The US and Iran have paused their attacks, but the situation remains tense. The Strait of Hormuz, Bab el-Mandeb Strait, and Suez Canal are all at risk of disruption, which could lead to a severe shortage of refined products. The US has depleted its emergency reserves, and President Trump has limited options to address the crisis. Experts warn that oil prices could rise to $124 per barrel if the situation worsens.
Our Reading
The numbers tell one story.
Helima Croft, head of global commodity strategy at RBC Capital Markets, notes that the situation is approaching a “no way out” scenario for oil. The conflict is affecting not only crude oil supplies but also refined products, with inventories of gasoline, diesel, and jet fuel being drawn down. The US has limited options to address the crisis, and President Trump is “essentially out of levers to pull.” The situation is likely to worsen in August if the Bab el-Mandeb and Strait of Hormuz are nearly shuttered.
Crisis management is now a global energy market’s new normal.
Author: Evan Null
