Introduces Ola Hanson to discuss if crude oil is pricing in the reality of supply being taken off the table in the Middle East.
Host (Tom/Anna)
Ola Hanson
Struggles to see that crude is fully pricing it in. The situation points to 'higher for longer' even with a ceasefire, due to infrastructure damage that will take time to repair.
Asks where the world can turn for refined products now that Middle East supply is shut out.
Host (Tom/Anna)
Ola Hanson
Probably not really anywhere. The world is incredibly dependent on the Middle East for middle distillates, which the US cannot supply.
Asks if a changing European stance on Russian sanctions is factored in.
Host (Tom/Anna)
Ola Hanson
That would be a step too far. Temporary removal of sanctions is just a small band-aid on a massive wound.
Asks about the Brent-WTI divergence and if a big spread is expected.
Host (Tom/Anna)
Ola Hanson
The $20 discrepancy reflected a dislocated WTI market, but refined products didn't show the same divergence. An export ban would hurt the US, so the spread is back to around $10, still elevated due to transport time and crude quality.
Asks when crude will start reflecting the energy taken off the table and if we are near demand destruction.
Host (Tom/Anna)
Ola Hanson
We are not there yet in the Western world, but demand destruction is starting to emerge in Asia. As inventories draw down, tightness will emerge and prices will have to go higher.
Asks for a 2022 comparison: worse for oil, but not for gas?
Host (Tom/Anna)
Ola Hanson
The 2022 crisis was a European shock from lost Russian pipeline gas. This is a global crisis and by far the much bigger one.
Asks if he likes gold at these levels.
Host (Tom/Anna)
Ola Hanson
I do, but I'm not immune to the fact it's a very popular investment now being put on the sidelines. The initial trigger was reduced US rate cut expectations and a stronger dollar.