Helima Croft warns that the oil market faces a significant threat as the conflict in the Middle East enters a more dangerous phase.
Helima Croft, head of global strategy at RBC Capital Markets, warns that the oil market is entering a dangerous phase that could push prices toward record highs. While the industry has successfully navigated previous shocks, several factors are now converging to threaten global supply. The market is facing a "choke point" as Iran’s attacks on tankers in the Strait of Hormuz freeze most crude traffic. Previous workarounds, such as piping oil to the Red Sea, are being hampered by a Houthi blockade. Additionally, shipping insurers may soon void policies for vessels that pay Iranian tolls, as these payments violate US sanctions. Global supply is further pressured by Ukrainian drone attacks on Russian refineries, which led Russia to ban diesel exports. Furthermore, global crude inventories have tumbled by 1.3 billion barrels over five months. Daan Struyven of Goldman Sachs predicts oil could test 2022 highs of $120 a barrel by October, while Croft suggests a full regional war could push prices above $150 a barrel.