Cost to move oil has surged!
Since Hamas attacked Israel, freight rates on 16 global routes are up +50%. Biggest gain has been for shipments across the Mediterranean Sea, which are up 2x. This is inflationary Source: Bloomberg, Genevieve Roch-Decter
Bloomberg analysis on war potential economic and market impacts
Source: Bloomberg
WIth the Vix <17, Brent oil<$90/bbl and S&P 500>4350, do you feel that risk is currently mispriced?
Source: HolgerZ, Bloomberg
Oil is not going away anytime soon
Source: Markets & Mayhem 🤖
A potential black swan which could follow this week-end attack: both Saudi & Iran oil supply going down?
Source chart: Bloomberg
What could be the impact on oil markets of the sudden war between Israel and Hamas (and the risks it could escalate)?
What could be the impact on oil markets of the sudden war between Israel and Hamas (and the risks it could escalate)? Some analysts see upside risk to à150 - others (e.g GS) are more mitigated. Reduced probability of Saudi-Israeli normalization and associated boost to Saudi production. The Wall Street Journal reported on Friday afternoon (before the attacks) that “Saudi Arabia has told the White House it would be willing to boost oil production early next year if crude prices are high—a move aimed at winning goodwill in Congress for a deal in which the kingdom would recognize Israel and in return get a defence pact with Washington, Saudi and U.S. officials said.” In GS view, the escalating conflict in Gaza reduces the likelihood of a near-term normalization in Saudi-Israeli relations. Source: www.zerohedge.com, WSJ, GS, Alpine Macro
Chart by Tavi Costa -> Ammonia prices just had the steepest monthly increase on record.
Commodity cycles typically follow a rotational pattern, and these price spikes are not isolated incidents.Oil recently rallied, gasoline prices increased, natural gas started to rise, and now ammonia looks to be initiating its move. This is an inflationary era and an unmistakable one. Source: Tavi Costa, Bloomberg
Looks like oil prices and bond yields have decoupled
Although the oil price has crashed sharply in the past 2 days, US 10y yields have fallen only slightly. Source: HolgerZ, Bloomberg
