Rabobank’s Senior Global Strategist Michael Every argues escalating conflict involving Iran, Israel and regional actors is increasingly threatening Oil supply rather than just flows, with upstream fields now targeted. Despite backwardation and a physical squeeze, futures still price cheaper energy within months, implying markets expect no long‑run disruption even as the bank warns it is easy to see how conditions could worsen significantly.
Energy markets face war premium
“The question today is if President Trump is himself caught in a Kobayashi Maru scenario given:”
“If he continues to attack, energy markets will panic further. The Israeli press says the country is preparing to fight for another month vs Iran and Hezbollah in Lebanon, not the three weeks alluded to yesterday; and Iran is now targeting upstream oil and gas fields (such as Shah in the UAE), not just refineries and export terminals, threatening energy supply, not flow.”
“Indeed, even as the media are calling this war Operation ‘Epic Folly’ –and recalling that oil prices vs physical supply, and bunker fuel, jet fuel, and diesel are worse– the futures market continues to price for cheaper energy within a few months. Even with backwardation showing the current physical squeeze, which seems to suggest an inherent view there will be no long-run disruption to the region’s energy flows: and US assets are not tanking more than others on the suggestion this is due to a looming 1956 defeat.”
“On one hand, Treasury Secretary Bessent says the US is fine with some Iranian, Chinese, and Indian vessels having successfully made it through Hormuz. Why wouldn’t they be?”
