The market is pricing in the probability the US government will restrict exports. If you're not exporting, you have bigger oversupply in the US, so WTI disconnects from international prices.
Asks if the market is wrong and the gap must close with WTI rising to meet Brent.
Lisa Abramowicz
Samantha Dart
No, the market is pricing a probability. It's correct to price it in, but the outcome of export bans may not have the desired effect and could lead to retaliation.
Asks if she's surprised the paper market isn't reacting more strongly to the physical damage.
Lisa Abramowicz
Samantha Dart
Yes, I am surprised. The market is acting like this could still be short-lived. The escalation suggests increased risk this goes on longer.
Notes that damaging infrastructure implies longer rebuild times than just a strait closure.
Annmarie Hordern
Samantha Dart
That's a key point. Two variables: volume out of market (unchanged so far) and duration. Destroying infrastructure raises the risk that disruptions last longer, potentially months.
Asks about impacts on other commodities like fertilizers.
Jonathan Ferro
Samantha Dart
Fertilizer plant supplies in Pakistan, Bangladesh, India are already being curtailed due to lack of natural gas. US has no spare capacity to fill the gap. Planting season is coming.