Javier Blas on Why Oil Could Go Much, Much Higher
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What is the current scale of the oil shock caused by the Strait of Hormuz closure?
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Hello and welcome to another episode of the All Thoughts Podcast. I'm Tracy Alloway.
And I'm Joe Weisenthal.
Joe, one of the weirdnesses of our current market moment. Is that you have all these oil analysts who keep talking about how the Strait of Hormuz closure is like the theoretical exercise that the entire market used to have nightmares about. This was like the big risk in the entire oil market. And yet, and yet, if you look at the actual price of oil and where it's traded, I mean, it's gone up. It's gone up
a lot.
But it's not it doesn't strike me as panic levels.
Yeah, I mean it's gone up a lot. And you know, it started the year, I'm just looking at Brent, uh it started the year around sixty, it had climbed to around seventy before the uh war started, now one fifteen. So it's a huge move in some sense. But it's not even at twenty twenty-two levels, which were very high. And that all that's true, and yet there is this disconnect I to don't understand. Like, why isn't it a two hundred yet? Or whatever. Cause Straight of Hormoes is closing. etc. Why isn't it even higher? But then the other thing is, okay, like prices are up a lot. But then you look at like what governments around the world are doing and it's like hair on fire panic, particularly in East Asia. So you get stories about, you know, Korean government workers being told to drive on ev drive to work depending uh whether their license plate number ends in even and odd, like extreme
rationing.
Rationing, yeah. And so I'm trying to like it still feels like there are some puzzle pieces here that I'm trying to fit together.
Absolutely. The other thing I would say is it feels also like there's this disconnect between what's going on in the financial world and what's going on in the physical world. Which I
don't get.
Yeah, and there was this really interesting note. This wasn't purely related to oil, but you could kind of extrapolate from it. But it was from Bloomberg Green Markets the other day, and they were talking about urea coming out of the Middle East and the pricing that they've been seeing from it. And one of the analysts says: the real issue on pricing is that while sellers and buyers can quote almost any price, nothing is actually getting out of the Gulf. That reality makes most disgusting. discussion academic rather than representative of actual business. So I wonder how much of that is happening in the oil market as well, where you have all these quotes that are flashing across the screen, but like for barrels that are essentially not going anywhere for a while.
Where you have to have.
Yeah, and I still don't totally get it because right, like these things do have to settle at some point and I don't know, I'm confused. And then there were those headlines early on about how physical oil quoted in Oman were fifty dollars a barrel above the front month. Many things I don't understand. So we have to talk to someone who can answer all these questions for us.
The great thing about an oil crisis, Joe, is that we will learn about all the oil benchmarks throughout the entire world. Okay, well, we really do have the perfect guest. Someone who's been on the show before, who a lot of people have requested us to bring back to talk about this particular moment in time. So without further ado, we have, of course, Javier Blass. He is the energy and commodities columnist over at Bloomberg, been writing about this stuff for a very long time. Javier, thank you so much for coming back on all bots.
Uh my pleasure seems that e every time that um you come back it's because of a crisis.
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Chapters
8 chapters
1
What is the current scale of the oil shock caused by the Strait of Hormuz closure?
0:01–4:26
2
Why are oil prices not soaring to $200 a barrel despite the disruption?
4:26–9:46
3
How are governments in East Asia responding with rationing and other measures?
9:46–15:13
4
What role do strategic and commercial oil inventories play in cushioning the crisis?
15:13–20:45
5
Why are refined product prices (diesel, jet fuel) spiking more than crude prices?
20:45–25:56
6
How does geography (East vs. West of Suez) affect the timing and severity of the oil shock?
25:56–31:32
7
What could happen if Iran imposes a toll on the Strait of Hormuz long‑term?
31:32–37:18
8
What are the longer‑term implications for energy markets and decarbonisation?
37:18–42:32
Speakers
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