Oil Market Dynamics and Geopolitical Risks (with Carol Massar, Tim Stenovec)

The drop in oil prices (WTI below $70, Brent below $75) reflects positive sentiment from tanker backlog clearing, but this is likely overdone. The Strait of Hormuz will remain risky—tanker availability and insurance costs will keep the market choppy. Iran's demonstrated ability to threaten the strait has permanently changed the landscape, pushing investment into pipeline alternatives. Gas prices at the pump are not falling as fast as crude due to refinery capacity, summer blend switch, and global demand—Trump's criticism of Big Oil is misplaced.

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Transversal Consulting 1.0
Management Consulting
Ellen Wald 7.5

Oil Market Dynamics and Geopolitical Risks (with Carol Massar, Tim Stenovec)

wti

Tanker availability issues, higher insurance costs, and potential production shutdowns (Iraq) suggest upward pressure on prices once the backlog clears.

Carol Massar

Asks what the lower oil prices (WTI below $70, Brent below $75) indicate.
Ellen Wald

The drop reflects positive sentiment from the backlog of tankers clearing (including Iranian oil), but equating this to normalized flows is a disservice. Prices are likely reacting more than they should—volatility is high. What's happening now is not what we'll see next week.
Carol Massar

Asks what will happen next in the oil market.
Ellen Wald

We will see difficulty chartering tankers. Iraq's oil company is already directing operators to shut down production because they can't get tankers to load crude. After the backlog clears, the question is whether anyone will risk going back in—they will have to pay much more. Tankers are engaged on other routes (US to Asia/Europe), so availability is a problem. This will play out over weeks, potentially a month.
Carol Massar

Asks if the Strait of Hormuz will ever be seen as safe again, given Iran's demonstrated capability.
Ellen Wald

No, we will not return to normal. The situation is forever changed as long as the current regime exists with the capability to threaten ships (drones, speedboats). It will either cost more or oil companies will invest in workarounds—pipelines to the Gulf of Oman, Arabian Sea, Mediterranean (via Jordan, Syria, Israel, Egypt). This will change the distribution of wealth and strategic importance of ports. No single waterway will ever account for 20% of seaborne petroleum again.
Tim Stenovec

Asks about the relationship between falling crude prices and gas prices at the pump, and whether Trump's criticism of Big Oil is justified.
Ellen Wald

Very little fact behind Trump's statement. Most retail stations are not owned by Big Oil. While the price of crude is the main component of gasoline, other factors matter: refineries are running at full tilt to supply the US and countries that can no longer buy from the Middle East; it takes time to replenish stocks; and the switch to summer blend (more expensive) and higher summer demand add to prices. The animus towards these companies is misplaced.

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