Iran War Exposes Limits of US Military Endurance

Summary

Bloomberg's Chris Kennedy and Jen Judson discuss oil flows six months into the US-Iran conflict, the strain on US military readiness, and a US-Venezuelan oil field deal. Kennedy says Gulf oil exports are still only about 40% of prewar levels, keeping oil and refined fuel price risks skewed to the upside, while the Venezuela deal is unlikely to boost near-term supply and sends a negative signal for long-term investment.

• Persian Gulf oil exports have recovered to about 7.5 million barrels a day, roughly 40% of prewar levels.
• The Strait of Hormuz remains constrained, with continued risks to oil and refined fuel product prices.
• Jen Judson says mine clearing is not the same as making the strait commercially safe and requires sustained operations.
• The US Navy faces personnel, equipment, maintenance and payroll strain after six months of operations.
• Chris Kennedy says the Venezuela deal covering 17 oil fields will take at least 36 months to materially boost output.
• The 100-year Venezuela lease is viewed as a bad signal for long-term oil investment and may create political and contract risk.