|

Oil: War risk keeps prices elevated – Rabobank

RaboBank's Global Strategist Michael Every highlights that Gulf War 3 and the closure of the Strait of Hormuz have pushed Oil prices about 60% above pre-war levels, with specific products like diesel and jet fuel particularly affected in Asia. The bank warns that if the conflict extends for months, the energy shock could rival Covid-19 and the 1970s oil crises combined.

Hormuz closure drives severe energy shock

"As the war enters its fifth week, the impact of the closure of the Strait of Hormuz is clear even if some geographies and parts of the energy/petrochemicals complex (i.e., diesel, bunker fuel, jet fuel, fertiliser, naphtha, sulphur, and helium) are hurting more than others. Oil prices overall are up 60% from pre-war levels, but some products are not available in some locations - Asia, diesel, and jet fuel ‘lead’ but others will follow if the war doesn’t end soon."

"Were it to extend for months, the crisis could equal the Covid-19 epidemic and the 1970’s oil shocks combined – and that doesn’t account for supply-side damage to Gulf energy flows from war and oil-well shut-ins."

"In short, for now we are sticking to our geopolitical base-case scenario of the war being over in 2-3 weeks on largely US terms, then a slow return to normal for energy… but not for geopolitics: the world won’t look the same on the other side of this whether the US wins or loses."

"Yet there are obviously huge fat tail risks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

GBP/USD keeps the vacillating tone near 1.3650

GBP/USD struggles to extend its ongoimg recovery on Monday, this time flirting with the 1.3650 zone. Indeed, Cable trades without clear direction, although it manages well to maintain its business in the upper end of the recent range, challenging multi-week tops despite the decent recovery in the Greenback.

EUR/USD drifts lower to the 1.1670 zone

EUR/USD navigates a tight range at the beginning of the week, hovering around the 1.1670 region amid humble losses. The pair’s decline follows a decent advance in the US Dollar while investors continue to closely follow developments from the US money market.

Gold pushes harder; focus is now on $4,700

Gold keeps its bullish pace well and sound and approaches the $4,700 mark per troy ounce for the first time since early May. The precious metal’s move higher comes despite slight gains in the US Dollar and a modest pullback in US Treasury yields across the curve.

Here's what I learned trading meme coins
I’ve been trading cryptocurrencies for the past seven years, with meme coins becoming one of the most exciting and implacable parts of my experience. I love them because they represent internet culture and community sentiment, and, let’s be honest, extreme speculation. Newly launched meme coins were especially tempting: get in early enough, I thought, and a small bet could turn into a huge return.
Bessent’s presser in focus
Preview: Busy week ahead, with Bessent kicking this off today, with things wrapping up with Warsh at Jackson Hole. For a month that should have been a temporary period of ‘quiet’, we had anything but last week, with the bond market and tariffs front and centre.
$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.