Episode summary
Iran Vows to Retaliate; Oil and Gas Prices Soar | Bloomberg Surveillance
Bloomberg Surveillance
· · 36 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Will Kennedy, Tani Fukui, Barry Eichengreen, Alicia Levine, Alexis Christoforous
Summary
Oil markets dominated the conversation as Brent crude climbed to $108-$109 a barrel after strikes on Iran’s gas field and worries rose that the conflict could spread to oil refineries, export terminals and the Strait of Hormuz. The host and a guest argued that the market had been complacent about the war’s effect on energy, and that the real damage is showing up across diesel, jet fuel, refining and petrochemicals rather than only in the headline crude price.
One guest said the shock is already filtering into the global economy through rationing in parts of Asia, higher U.S. diesel costs, and supply-chain strain in chemicals and feedstocks. A second guest said European governments were skeptical of the war’s strategy, doubtful that keeping Hormuz open by force is realistic during a conflict, and more interested in pushing for diplomacy than expanding their role.
The macro debate centered on whether the oil surge changes the Fed’s path. One guest said inflation expectations remain anchored for now, but the central bank may need to pay more attention to shorter-term break-evens and to the possibility of a future hike if the shock lasts. Another guest argued clients were not making big portfolio shifts, calling the market’s reaction manageable and saying U.S. equities, tech, and big banks still have relative appeal.
Key takeaways
- The host and Will Kennedy said Brent at $108-$109 signals complacency is ending and that Iran may intensify attacks on oil infrastructure.
- Will Kennedy said the disruption is already hitting global markets through $5 U.S. diesel, fuel rationing in parts of Asia, and higher chemical prices.
- Tani Fukui said the Fed may need to focus more on near-term break-evens if oil-driven inflation expectations rise, even though three cuts are still expected later this year.
- Barry Eichengreen said European governments doubt a military solution to keeping the Strait of Hormuz open and want diplomacy instead.
- Alicia Levine said clients are not making major moves because oil shocks usually have short-lived effects on asset prices, and she still sees tech and big banks as attractive.
Notable quotes
“the market has been a little bit complacent about the impact of the war”
“it's happening now it's just not evenly distributed”
“I think most people in governments in Europe would make the following points”
“what we've learned over history and we've talked about this unfortunately way too many times in the last five to six years is that oil spikes and geopolitical events have very short-lived effects on asset pricing”
How the episode opens
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I think it was when Fisel was at Saudi Arabia. You remember Alec Guinness and T uh Lawrence of Arabia, Stuart Lawrence invented our commodity research with a guy named Justin Carrian. Over the years, they've passed the baton to Will Kennedy.
It is absolutely the toughest job at Bloomberg. It is a global global mandate. We are thrilled Will Kennedy could come away from the desk with Brent crude at 108.
Will Kennedy to your system to the international hydrocarbon system. What's the difference between $100 a barrel and $108 a barrel?
It's great to be with you, Tom. Um well uh it just shows I think that the market has been a little bit complacent about the impact of the war and when they see the headlines today about Israel and the US hitting this gas field. Now this gas field will not have a huge impact on international markets.
It's gas that is used at home in Iran. But what it does mean is I think it Iran will take it as a signal that the energy system the global energy system is fair game. So there's a lot of worry now that that means that they will intensify attacks against oil refineries against oil fields against export terminals and indeed concentrate on the straight of all moves and it will just mean that the pain that's going through the energy system will increase.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- iran retaliation
- oil and gas prices
- market strategy
- investment outlook
- front page headlines
Companies and tickers mentioned
- MET
- MetLife
- BNY Mellon
Watch the episode
Watch “Iran Vows to Retaliate; Oil and Gas Prices Soar | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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