Oil: War-driven volatility and structural risks – Rabobank

Rabobank’s Global Strategist Michael Every highlights that Brent has eased to around $111 and WTI to $102 despite a Kuwaiti tanker being hit, while European and African Oil markets are tightening as Asia fills supply gaps. He cites Bloomberg’s warning of $140 Oil if Red Sea shipping is hit again.

War premium and tightening supply signals

"In energy, Brent was down at $111 this morning in Asia despite the Kuwaiti oil tanker being hit, with WTI at $102 and 1-month TTF gas at €54.8, while jet fuel in Singapore is at a new high of $233.5, showing more pressure there. European and African oil markets are getting tighter as Asia buys more to fill its supply gaps. Expect that to continue ahead."

"Israel is targeting Iran’s leaders and PM Netanyahu says the country is only “over halfway” to its war goals, with no timeline for ending the conflict. Key Gulf states are urging Trump to intensify the war, even as Trump may bill them for it. Iran’s parliament just passed a bill imposing tolls on Hormuz, seizing that key waterway, and is pressing Yemen’s Houthis to renew attacks on Red Sea shipping, which would massively exacerbate this crisis - Bloomberg warns of $140 oil if so; a disavowed report just said Egypt, who wants the war to end, warned the Houthis it would then attack them."

"Only if one starts with that strategic geopolitical imperative is Trump’s potential willingness to climb the escalatory ladder predictable, as is that there can’t be the ‘TACO’ markets want. That thinking underlines our geopolitical base case this war is largely over in 2-3 weeks, on favourable terms to the US – which is what Secretary of State Rubio just told the G7 too: but only after things get much worse first. If they get worse and stay there, so will the economic projections."

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