Will Kubzansky

"Oil traders are looking to what is happening in the Strait of Hormuz and trying to figure out how long flows will be backed up... Diesel prices have increased more than gasoline prices, they are up in the $4.70s." The market is underestimating the duration of the supply shock. Because refineries cannot easily be turned off and on, and shipping routes are compromised, the structural floor for crude and refined products has been raised. This directly benefits domestic energy producers and broad oil-tracking funds. LONG. The geopolitical risk premium is expanding, and emergency reserve releases are insufficient to cover the structural deficit if the conflict drags on. A sudden diplomatic resolution or an accelerated end to the war would collapse the geopolitical risk premium, sending oil prices sharply lower.

"Oil traders are looking to what is happening in the Strait of Hormuz and trying to figure out how long flows will be backed up... Diesel prices have increased more than gasoline prices, they are up in the $4.70s." The market is underestimating the duration of the supply shock. Because refineries cannot easily be turned off and on, and shipping routes are compromised, the structural floor for crude and refined products has been raised. This directly benefits domestic energy producers and broad oil-tracking funds. LONG. The geopolitical risk premium is expanding, and emergency reserve releases are insufficient to cover the structural deficit if the conflict drags on. A sudden diplomatic resolution or an accelerated end to the war would collapse the geopolitical risk premium, sending oil prices sharply lower.