Javier Blas on Why Oil Could Go Much, Much Higher

In this episode of Odd Lots, hosts Tracy Alloway and Joe Weisenthal dive into the current oil crisis sparked by the closure of the Strait of Hormuz, featuring returning guest Javier Blas, Bloomberg's energy and commodities columnist. Blas explains that while crude oil prices—like Brent crude at $115—are elevated, they haven't reached panic levels because the disruption is still relatively short-lived, having lasted only about a month. He contrasts this with past crises like the 1990 Gulf War or the 2022 Russia-Ukraine conflict, which lasted much longer. The real pain, he argues, is not in crude prices but in refined products: diesel in Singapore is nearing $200 per barrel, far exceeding 2022 highs. This disconnect stems from a shrinking global refining capacity and reduced trade in refined products, making supply shocks more impactful. Blas also highlights the geographic divide: East of Suez (Asia) feels the crisis immediately, while West of Suez (Europe and the U.S.) is insulated due to longer shipping times and domestic energy buffers. The U.S. natural gas market remains stable due to limited export capacity, and electricity prices in Europe have normalized, signaling that the crisis is not as widespread as in 2022. However, long-term risks loom—especially if the conflict drags on, fertilizer and diesel prices erode food system resilience, and coal use surges in Asia despite decarbonization goals. The episode ends with a reflection on how geopolitical shifts, like Iran potentially imposing a toll on the Strait of Hormuz, could redefine global energy security, even if temporarily accepted by the market.