Daan Struyven 2.0 8 ideas

The speaker states their base case for Q4 oil prices is about $20 higher than pre-war levels due to inventory hits, SPR restocking, and a lasting security premium. They also state risks to their forecast are skewed to higher prices. The ongoing supply shock from the Iran war, even with partial rerouting, has structurally reduced available supply and drawn down inventories. Replenishing these inventories and pricing in a persistent geopolitical risk premium creates sustained upward price pressure. The explicit forecast is for meaningfully higher prices than the pre-war equilibrium, with acknowledged upside risk. A faster-than-expected normalization of flows through the Strait of Hormuz and a resolution of the conflict that removes the security premium.

The speaker explicitly raised Goldman Sachs' year-end Brent crude price forecast to $80 (from a pre-conflict base in the $60s), citing the "largest oil supply shock ever" from the Strait of Hormuz closure. This shock will lead to two structural changes: faster government strategic stockpiling and a lasting security premium in longer-dated prices, damaging global inventories. Higher prices are justified by fundamentals (counting barrels) and structural shifts, not just short-term risk premiums. A faster-than-expected resolution to the Strait of Hormuz disruption or significant, coordinated global policy action to offset the supply loss.

Goldman analyst states the current 17M bpd disruption is the largest oil supply shock in history. Brent could exceed its 2008 all-time high if the market prices in lengthier disruptions or damage to infrastructure. Every day without improved tanker flows through the Strait of Hormuz adds upward pressure. The risk premium rises with the perceived probability of lengthy disruption or infrastructure damage. WATCH because the price path is critically dependent on highly uncertain geopolitical and military developments regarding the Strait's security and infrastructure integrity. A rapid de-escalation and reopening of the Strait, leading to a swift normalization of flows and a collapse in the risk premium.

Speaker said there is "significant upside price pressure" for Western crude markets like WTI and Brent, albeit with more limited tightness. Upside price pressure indicates that prices are likely to rise, driven by regional market dynamics. WATCH these benchmarks for price movements, as they are under upward pressure. Moderation in global oil demand or increased supply from other regions could offset the pressure.

Speaker identified the top two upside risks to oil prices: a lengthier disruption of Strait of Hormuz flows and persistent damage to energy infrastructure. These geopolitical risks could lead to sustained supply disruptions, historically causing long-term production declines and higher prices. WATCH oil prices for potential increases due to these elevated risks. De-escalation of conflicts or effective mitigation of infrastructure damage.

Speaker stated there is "very significant tightness for Middle Eastern crude grades such as Oman and Dubai." Supply tightness in commodity markets typically leads to upward pressure on prices. WATCH these crude grades for potential price increases due to current market conditions. If the supply shock eases or demand weakens, the tightness could diminish.

"We look for a decline in Brent from around 70 to 60... We still look for a global surplus... Energy equities are increasing the price on the long-term robust oil." There is a divergence. The commodity (Oil) is bearish due to structural oversupply (1.8m bpd growth vs 1.2m demand). However, Energy Equities are undervalued, efficient, and paying dividends, allowing them to outperform the underlying commodity. SHORT CRUDE OIL / LONG ENERGY EQUITIES A major geopolitical escalation (e.g., Iran closing the Strait of Hormuz) which could spike oil to $200.