“Oil prices move not just on supply and demand, but on expectations about supply and demand.” -Philip Verleger
First, I’d like to apologize for the late delivery of last week’s CrudeIQ newsletter. I had every intention of getting this out Saturday morning, but when I woke up that morning, well, the global oil landscape had changed.
The conflict in the Middle East is something we saw coming, but the timing and breadth of the conflict was unknown. As of the writing of this newsletter, there is still a lot of confusion as to the extent of damage done to the oil infrastructure in the region. Conflicting reports are rampant and I’m still trying to parse out fact from fiction.
Here is what we do know:
When oil markets opened Sunday evening, crude prices jumped 6-7%, and have held steady for almost 24 hours.
Traffic through the infamous Strait of Hormuz, where 20% of the world’s oil passes through, has been limited, but not completely closed off.
The duration of the conflict is uncertain. With no clear finish line proposed, it’s hard to predict when the conflict will resolve and regular oil production/exports will resume.
Gasoline prices in Utah will be going up. Between the more expensive summer blend refineries are required to produce, and the threat of supply disruption in the Middle East, gasoline prices will absolutely be rising over the next couple months.
What happens next?
Right now the best we can do is wait and see.
Many “experts” are putting out bold predictions, but as of this afternoon there is too much uncertainty to confidently divine what’s around the corner.
I am continuing to keep my ear to the ground to know the extent of what’s happening in the Middle East. As the (literal) dust settles over the next few days, we’ll have a better picture of the oil disruption and what that will mean for our Utah gas prices.
This Thursday I plan on updating you on 1) the macro oil markets and the effect of the Iranian war on energy prices, and 2) the final details of Utah HB 575 which passed and was signed into Law last week.
Thanks for reading!
Got questions about what’s going on with gas prices in your neck of the woods?
Hit reply and let me know!
Your question might end up in an upcoming addition of CrudeIQ!
-Mark Acor, [email protected]