Art Berman: The Global Energy Order Is Breaking

Summary

Art Berman argues the oil market is underpricing a severe upstream supply shock: Persian Gulf production is down about 10 million barrels per day, larger than COVID's decline. He explains why Hormuz flows are unlikely to normalize quickly and why the futures curve's steep backwardation signals scarcity. He sees a system shock for the global energy order, with upward pressure on crude and the old US-backed maritime/dollar bargain unraveling.

• Hormuz tanker traffic collapsed to about six commercial vessels per day from 130-140 pre-war.
• Berman expects no quick normalization and says flows may not reach 50% of pre-war by mid-2027.
• Persian Gulf production is shut in by roughly 10 million barrels per day, at its low down 15.
• He compares the shock to COVID, when global production fell about 11 million barrels per day.
• The futures curve shifted from flat to steep backwardation, signaling near-term scarcity.
• He says markets focus on midstream/downstream while the real issue is upstream production.
• Berman describes a broader unraveling of the US-backed maritime trade and dollar reserve bargain.