Episode summary
Javier Blas on Why Oil Could Go Much, Much Higher | Odd Lots
Odd Lots
· · Hosts: Tracy Alloway, Joe Weisenthal · Guests: Javier Blas
Summary
Javier Blas argued that the oil shock could still intensify because the decisive variable is not just how large the disruption is, but how long it lasts. He said the market is being cushioned for now by normal inventories, strategic stockpiles, and floating storage, but those buffers are temporary. In his view, if the Strait of Hormuz remains constrained for weeks or months, prices could move much higher than they have so far.
He also said the pain is highly uneven geographically. East Asia is feeling it first because it depends heavily on Middle East barrels and sits closer to the route, while Europe and the Americas are buffered by longer shipping times and different supply links. Blas emphasized that crude benchmarks can understate the stress: the real pressure is showing up in refined products, especially diesel and jet fuel, where Singapore prices have approached $200 a barrel.
Blas said the U.S. is partly insulated because domestic natural gas is trapped by export bottlenecks, but he expects higher oil to encourage more drilling only at the margin. He was less worried about an immediate food crisis than about fiscal strain from fertilizer subsidies, while warning that a prolonged shock could push Asia toward more coal in the near term and more solar and batteries over time.
Key takeaways
- Blas said the oil market is still being cushioned by inventories, strategic releases, and floating storage, so the full price impact has not yet hit.
- He argued that East Asia is taking the hardest immediate hit because it relies more on Middle East oil and is closer to the Strait of Hormuz.
- Blas said refined products matter more than crude for consumers, and Singapore diesel near $200 a barrel shows the real stress.
- He said U.S. natural gas stays unusually weak because it is hard to export, insulating American industry from the global shock.
- He expects higher oil to spur some U.S. drilling, but not enough in the next three months to offset the loss of supply.
- On food, Blas said the bigger near-term risk is fiscal pressure from fertilizer subsidies, not an immediate global food shortage.
Notable quotes
“One is the size of the disruption and the size is huge and then is the length of that disruption, how long it goes”
“so far the disruption is relatively short left. We have been a month”
“I mean, for sure at the $100 oil, everyone is going to try to do more”
How the episode opens
Bloomberg Audio Studios podcasts, radio, news. — Hello and welcome to another episode of the Odd Thoughts podcast. I'm Tracy Aloway — And I'm Joe Weisenthal. — Joe, one of the weirdnesses of our current market moment — Yeah. is that you have all these oil analysts who keep talking about how the straight of horm closure is like the theoretical exercise that the entire market used to have nightmares about. This was like the big risk in the entire oil market. And yet and yet if you look at the actual price of oil and where it's traded,
I mean it's gone up. — It's gone up a lot, — But it's not it doesn't strike me as panic levels. — Yeah. I mean it's gone up a lot and you know it started the year I'm just looking at Brent uh it started the year around 60 it had climbed to around 70 before the uh war started now 115 so it's a huge move in some sense
But it's not even at 2022 levels which were very high and that all that's true and yet there's this disconnect I to don't understand like why isn't it at 200 yet or whatever because straight of hormones is closed etc why isn't it even higher but then the other thing is okay like prices are up a But then you look at like what governments around the world are doing and it's like hair on fire panic particularly in East Asia. So you get stories about you know Korean government workers being told to drive on every drive to work depending uh whether their license plate number ends in even and odd like extreme rationing. Yeah.
And so I'm trying to like it still feels like there are some puzzle pieces here that I'm trying to fit together.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- oil prices
- strait of hormuz
- iran war disruption
- strategic inventories
- east asia energy shock
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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