Asking about the oil price spike, difference between spot and futures, and whether there's a fear premium built in.
Joe
Kevin Buck
The difference is between stocks and flows. Flows are interrupted now. We had an enormous inventory build in 2025 but are now drawing down stocks as production shuts in.
Asking for duration of disruption, peak oil price, and whether we'll be at $85 in two weeks.
Joe
Kevin Buck
Depends on what happens on the ground/in the water. If conflict goes on weeks, supply-demand balances will demand higher prices until supply returns.
Asking about implications for Russia and China given Iraq's production at one-third normal rate.
Joe
Kevin Buck
Russia's barrels command more premium now. China will have to pay more but may have incentive to draw down strategic reserves this time.
Asking about current SPR status and whether Trump administration tried to build it back up.
Joe
Kevin Buck
Congress gave only $171 million for SPR refill instead of needed billions. We're at about 450 million barrels now. Time to buy insurance is when you don't need it.
Asking about inflationary impact of oil price hikes and rules of thumb for pass-through to other prices.
Joe
Kevin Buck
10% increase in oil prices equals 0.4% increase in inflation. Medium-sour barrels from Gulf that move freight and planes are missing, keeping products expensive until inventories replenish.
Asking if Strait reopening in a week would be possible or surprising.
Joe
Kevin Buck
Originally modeled one-week closure scenario as baseline expectation. We're past that now. One week is starting to look optimistic.