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Oil Market Overly Complacent on Geopolitical Risks: Rapidan

OIL

The oil market is overly complacent about geopolitical risks while demand has disappointed in China and India according to Rapidan Energy Group via Bloomberg.

“The market is too complacent,” and the geopolitical risk premium should be at least $12/bbl rather than “pennies” currently factored in.
  • “We’re likely to see more escalation, stepped-up attacks, and the market’s going to be dragged back to this bullish Mideast risk”. The risk of oil and LNG supply disruption is 30% as sides refuse to de-escalate.
  • “The path to a real disruption, and a real risk premium, leads through Iran”. Closure of the Strait of Hormuz would be a “heart attack” for the market.
  • “We’re heading down until we see those inventory draws, or geopolitical risk materializes” and OPEC+ is “so far not effectively signalling coherence and ability to put a floor in.”
Energy BulletsCommodities
Energy BulletsCommodities

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