Bradley Saunders

It's difficult to say at the moment.

Obviously, there is so much uncertainty.

We just have to take the conflict today as it comes.

But I suppose the best way to think about this, the way we've been looking at it at Capital, is sort of sketching out three scenarios, really.

One being that, similar to the 12-day war last year, conflict quickly resolves and the oil price drops back towards $70 or $60 a barrel by the end of the year.

The second scenario being that oil prices sort of stay around $100 for a few months as the conflict continues.

There's limited damage to energy infrastructure, and once resolve is reached of some kind, oil prices drop back later on in the year.

And the third scenario where the conflict spirals, energy infrastructure is damaged to quite a degree, and the oil price remains around $120 to $150 a barrel throughout the year.

I mean, a lot of energy infrastructure has been closed for the time being.

So even if it's not directly struck, it's the case that it's still not producing or transporting anything.

What's really key here is traffic through the Strait of Hormuz.

About 20% of the world's oil passes through the Strait.

And that's really what's critical to the direction the oil price goes in.

So typically, what we would see in periods of geopolitical tension or stress in general is a flight to safety among investors.

And the most safe asset of all has been the case for decades now is seen to be the 10-year period.

US Treasury.

Instead, we're seeing the opposite, where the yield is rising.

And I think that that is less driven by, as I say, a flight to safety you typically see, and more the case that it now looks increasingly unlikely that the Federal Reserve will lower interest rates by as much as investors had been expecting this year.

These 400 million barrels, they're enough to fully offset the impact of lost supply due to the conflict, if the conflict were to end today.

Now, if this conflict continues for another two to three weeks, already then,