Episode summary
Iran War Seen Causing Prolonged Pain on Energy Prices | Bloomberg Surveillance
Bloomberg Surveillance
· · 28 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Mike McGlone, Cole Smead, Karen Manna, Rebecca Walser
Summary
The discussion centered on the Iran war shock, its impact on oil, and the possibility that energy prices stay elevated even if the conflict eases quickly. The host and Mike McGlone argued that the market is already pricing in some de-escalation, but that the strike on supply routes and the risk of renewed attacks could keep crude under pressure for weeks or longer. McGlone said the move in gold had turned it into a speculative risk asset and warned that industrial metals and gasoline strength could reinforce a recessionary path.
Cole Smead took a longer-term view, arguing that investors are underestimating how durable the conflict and its market effects may be. He said energy has become a more attractive place to own capital than software, while banking still looks workable because private credit problems appear concentrated in institutions rather than the broad consumer economy. Karen Mann said fixed income has repriced quickly, with the Fed likely able to cut less than previously expected, and she favored income and coupon clipping over price appreciation.
Rebecca Walser also framed the move in commodities as part of a bigger transition, saying her firm has shifted from precious metals toward oil while still believing gold and silver matter over time. She argued that the world is moving through energy stress, geopolitical strain, and a shift from fiat toward stablecoin and blockchain-based systems, with risk-on assets like crypto still too early to prove themselves in a recession.
Key takeaways
- Mike McGlone said the crude oil spike could matter more for recession risk than for a lasting supply shock, especially if gasoline stays near $4 a gallon.
- Cole Smead argued energy stocks are being mispriced relative to software, and said investors are still underowning oil despite the conflict.
- Karen Mann said the bond market has repriced for fewer Fed cuts, with her house view moving from two expected cuts to one later in the year.
- Rebecca Walser said her firm has rotated from precious metals toward oil since October, while still keeping a long-term gold and silver thesis.
- All four guests treated private credit as a liquidity and valuation issue rather than an immediate systemic crisis.
Notable quotes
“I think the crude oil peak so far this year near $120 a barrel in WTI, Paul, will go down in history similar to 147 in 2008 and 130 in 2022”
“I think it's more likely to go down to $4,000 an ounce”
“what we're in is a longer-term conflict. And what are we seeing? We are seeing longer-term problems arise”
“We have seen a nice orderly widening of spreads there, but we are not at our target to lift out of the underweight position”
“We've really kind of moved our portfolio from commodities and specifically precious metals more to oil starting October of last year”
How the episode opens
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This is the Bloomberg Surveillance podcast. Catch us live weekdays at 7:00 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts or watch us live on YouTube. Mike McGlone, senior commodity strategist, Bloomberg Intelligence. Mike, this is such an unknown scenario here as to how the war in Iran will play out in the coming days and weeks.
We could wake up tomorrow and President Trump, for whatever reason, decides to claim victory and and bring everybody home here. If that were to happen, how do you think energy prices would ebb here and pull back? Would they go back to pre-war levels?
Would it take How quickly would it happen? Or are we at maybe a little bit higher levels here just given the damage that's been done and and and maybe the tension levels that still remain? I think the crude oil peak so far this year near $120 a barrel in WTI, Paul, will go down in history similar to 147 in 2008 and 130 in 2022.
Right now on the week, WTI crude oil's down almost 4% and part of that is it's switching contracts. It's gone from the April to the May. If you go out to December, it's down to $78 a barrel.
Why is December important? It's going to be front month right before the midterms. So the scenario you mentioned, I think it's very unlikely.
Right now we're at the stage of trying to produce capitulation from Iran where they have no more ability to create offensive issues in the in the Gulf. It's happening. The key thing I think people are underestimating is there's some significant forces.
They're not only US, President Trump, US military, Israeli military, but also Israeli military intelligence.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- iran war impact on energy prices
- oil and energy markets
- commodities outlook
- fixed income investments
- market outlook
Companies and tickers mentioned
- FHI
- Bloomberg
- Smead Capital Management
- Federated Hermes
- Walser Wealth Management
Watch the episode
Watch “Iran War Seen Causing Prolonged Pain on Energy Prices | 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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