Ben Emons on Middle East Risk & the Fragility of Global Oil Markets

The global oil market is at a breaking point, with Brent crude prices hovering near $120 a barrel amid a fragile ceasefire in the Middle East and the Strait of Hormuz still partially closed. Ben Emmons, Chief Investment Officer at FedWatch Advisors, argues that this time is different: Pakistan’s emerging role as mediator—backed by a crisis call just 90 minutes before a Trump-declared deadline—has given markets newfound confidence in de-escalation, unlike previous hollow promises. The physical oil market remains under pressure, with traders demanding premiums due to disrupted flows and supply shortages, especially in Asia. This dislocation between physical and futures prices signals deep structural risk. Emmons warns that the Federal Reserve and other central banks cannot afford to 'look through' this shock—oil-driven inflation expectations are already behaving like those in the 1970s, with one-year forecasts spiking. Markets are not fully pricing in a lasting relief, and the Fed may need to act preemptively to avoid a 2022-style inflation spiral. The real test? Whether the Strait of Hormuz can fully reopen and restore consistent tanker traffic—without which oil could hit new highs despite the ceasefire.