Rabobank's Senior Market Strategist Benjamin Picton says that the possibility of a war with Iran and the threats near the Strait of Hormuz are creating a lot of risk for the oil markets. He points out that Iran might respond by attacking energy facilities in the Gulf. If the US seems to back down, Iran could take control of the flow of oil through the Strait of Hormuz. This could lead to oil being priced in Chinese Yuan (CNY) instead of US dollars, which the US does not want.
Hormuz tensions continue to pose a risk to energy supplies.
Destroying oil and gas facilities brings us nearer to the worst possible situations where energy and other resources stay limited for a very long time.
So, can we expect an imminent TACO (Trump Always Chickens Out) with the hoped-for snapback in oil prices and risk assets? The short answer is 'probably not'.
Even if the US were to lay down arms, there is no assurance that Iran would respond by reopening the Strait of Hormuz. This implies the US could risk its own Suez moment, as it would effectively lose the war without securing the flow of energy to global markets.
Such a scenario could be seen as the end of the USA's status as a global hegemon, with Iran maintaining control over oil shipments through the Hormuz Strait, collecting toll payments and likely enforcing demands that cargo be priced in Chinese yuan.
Iran recently made some friendly moves by letting Indian LPG ships pass through the Strait and saying they might do something similar with Japan. This helps a little with energy prices right now, but it’s not a big enough change. Asian countries are still cutting down their energy use until the Hormuz area is open again, either way.
Hormuz tensions continue to pose a risk to energy supplies.
Destroying oil and gas facilities brings us nearer to the worst possible situations where energy and other resources stay limited for a very long time.
So, can we expect an imminent TACO (Trump Always Chickens Out) with the hoped-for snapback in oil prices and risk assets? The short answer is 'probably not'.
Even if the US were to lay down arms, there is no assurance that Iran would respond by reopening the Strait of Hormuz. This implies the US could risk its own Suez moment, as it would effectively lose the war without securing the flow of energy to global markets.
Such a scenario could be seen as the end of the USA's status as a global hegemon, with Iran maintaining control over oil shipments through the Hormuz Strait, collecting toll payments and likely enforcing demands that cargo be priced in Chinese yuan.
Iran recently made some friendly moves by letting Indian LPG ships pass through the Strait and saying they might do something similar with Japan. This helps a little with energy prices right now, but it’s not a big enough change. Asian countries are still cutting down their energy use until the Hormuz area is open again, either way.
