IEA Sees Wider Oil Deficit, Projected Wisconsin Upset, More

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Why are oil prices climbing and what does the IEA’s larger oil shortfall mean for the market?

Jennifer Zabasaja 0:00
A new chapter in global growth is being written and much of it is happening in Africa.
Noam Radan 0:05
Africans need to invest. There are deals to be done and business to be won.
Jennifer Zabasaja 0:09
I'm Jennifer Zabasaja. Every week on the Next Africa podcast, we track capital flows and political shifts shaping the continent's future. The digitalization of Africa is going to power its growth. Creating the world of something like HIV is possible. Population growth is so enormous in Africa. Listen to Next Africa on Apple, Spotify or wherever you
Tiwa Adebayo 0:29
get your podcasts. News when you want it with Bloomberg News Now. I'm Tiwa Adebayo.
Stephen Carroll 0:34
And I'm Stephen Carroll.
Tiwa Adebayo 0:36
Oil prices are continuing to grind higher today as skepticism grows over the prospects for a deal to restore energy flows through the Strait of Hormuz. Brent crude is now trading above $89 a barrel after jumping by around 12% over the past five sessions. Bloomberg Intelligence says a frozen U.S.-Iran conflict is now the most plausible scenario.

How could a frozen U.S.–Iran conflict and Strait of Hormuz tensions push oil to $100‑$150 a barrel?

Tiwa Adebayo 0:57
It warns that could push oil into a range of $100 to $150 a barrel. with the upper end becoming increasingly possible as market buffers erode. Noam Radan is a senior fellow at the Washington Institute for Near East Policy.
Noam Radan 1:12
It is unlikely that we're going to go back to the maritime arrangement that existed in the Strait of Hormuz before the Iran war. Iran has gained immense influence in the strait. It will not let go of this leverage it has obtained easily.
Tiwa Adebayo 1:29
Noam Radan's assessment comes as the latest US government forecast expects oil supply disruption from the war to reach about 600,000 barrels a day until the end of next year. Adding to the squeeze, Russia's overseas crude shipments have fallen to their lowest since May amid continued Ukrainian strikes on its oil infrastructure. And a line just crossing the terminal this moment, the IEA has doubled its estimate for oil shortfall in the third quarter.
Stephen Carroll 1:57
With the advance in oil prices comes as the US and Iran both appear to be hardening their positions in negotiations over the Strait of Hormuz. That's despite Pakistan's defence minister saying the two countries are close to some sort of arrangement. Former US Deputy Secretary of State Wendy Sherman is more sceptical.
Unknown 2:13
I wish I did share Pakistan's optimism and I will hope that there is more reality to this than I think there is. We are definitely at a stalemate.
Stephen Carroll 2:24
Wendy Sherman was speaking as President Trump said he's in no rush to secure a deal and the US is in a very good position.

What impact does the Iran‑U.S. stalemate have on U.S. inflation data and Federal Reserve policy?

Stephen Carroll 2:31
Conflict is also a major focus for the Federal Reserve with the Iran war adding to price pressures ahead of key US inflation data due out later today. Boston Fed President Susan Collins has told the Financial Times she could back a September rate hike if the data dictates.
Tiwa Adebayo 2:45
A split between the U.S. and Japan over Bank of Japan policy risks undermining efforts to support the yen. Prime Minister Sanae Takeuchi is wary of raising rates too quickly, while U.S. Treasury Secretary Scott Besson sees tighter policy as crucial. The yen has already given back some gains from the first coordinated U.S.-Japan intervention since 1998. Our Market's Live strategist Mark Cranfield says the BOJ's next move will be crucial.
Mark Cranfield 3:13
So the BOJ speakers will really have a big sway on whether or not people get serious about a September rate hike. But it probably needs September and October to come back to back for people to really get behind the yen.
Tiwa Adebayo 3:27
That's Bloomberg's Mark Cranfield. Expectations are building for another BOJ rate hike in September or October as the yen again nears 160 to the dollar.
Stephen Carroll 3:38
Shares on CoreWeaver surging more than 16% in pre-market trading as booming AI demand helped double second quarter revenue. Looking at the company's full year revenue outlook, they raised it to between $12.4 billion and $13.2 billion. Gloria, head of technology research at DA Davidson, says the results are an encouraging step for the firm.

How might the split between the U.S. and Japan over BOJ policy affect the yen and global rate‑hike expectations?

Gil Luria 3:59
It's incrementally positive. There is still a really big question about whether we even need neoclouds, whether they're a good business. And the base of it is, are they getting a good enough return on investment to pay for the very expensive capital that they have to borrow?

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