Asks if this is a regime change for the price of crude.
Jonathan Ferro
Dan Pickering
It's certainly putting a lower floor under crude. If the war ends without definitive control of the Strait, there will be a higher price to crude, though not necessarily triple digits.
Dan Pickering
You can't tweak around the margin forever; 15% of global supply is offline. At some point (months, not quarters), price will have to solve the supply/demand equation, and that price is 20-30% higher than today's ~$100 WTI.
Asks what the oil market is pricing in given the high likelihood the conflict continues for weeks.
Lisa Abramowicz
Dan Pickering
The 2027/2028 futures moving from ~$60 to high $60s/low $70s tells him the market has decided there's a $5-$10 longer-term premium because of how this situation winds up.
Asks about the gap between physical and futures markets, noting Oman/Dubai are $50-$60 higher than Brent.
Lisa Abramowicz
Dan Pickering
If you have to own physical barrels, you are paying a significant premium over financial markets. There are signs of physical tightness not reflected in financial markets.
Asks if a prolonged shutdown would cause futures to catch up to physical prices.
Annmarie Hordern
Dan Pickering
It would certainly drag financial markets higher. If that happens, we will start to price out the 5-15 million barrels a day we can't get through the straits.