Asks if oil price will continue to whipsaw given conflicting narratives.
Paul Allen
Muyu Xu
Yes, extreme volatility expected. No meaningful de-escalation; Trump just kicked the can down the road. Strong momentum to push prices up. Sees potential for oil to hit $140 per barrel in 3 to 4 weeks ($10/bbl rise per week) if no meaningful de-escalation.
Asks if a five-day delay matters if the Strait remains effectively closed.
Paul Allen
Muyu Xu
No. Vessels going through are selected and measured; Iran controls volumes. Non-Iranian ('compliant') crude exports are only 3% of normal levels. Does not expect quick restoration of safe navigation.
Asks if US waivers for Russian/Iranian crude will cool prices.
Paul Allen
Muyu Xu
Intent is good but practically very difficult, especially for Iranian crude due to fragmented market, payment, shipment hurdles, and lack of trust. Majority of Iranian oil will still go to China.
Asks about pressure on Asian refiners.
Paul Allen
Muyu Xu
Refiners cutting run rates by 10-20% or bringing maintenance early. Seeking alternative supplies takes 1-2 months. Without SPR releases, deeper cuts likely. Demand destruction of ~0.5 million b/d could start next month if situation drags on.
Asks if we can ever return to $70 oil and when.
Paul Allen
Muyu Xu
Maybe next year. Even if war ends now, normalization of safe navigation might only happen in summer. Oil producers need weeks/months to resume; countries need to replenish inventories. All factors support oil prices in short term.