Analysts at J.P. Morgan are estimating that currently there is no geopolitical risk premium in oil prices, despite all the attacks on the Red Sea:
- Shipping disruptions are "easily handled"
- rerouting tankers around the southern tip of Africa adds only $2 a barrel to oil prices
- Gulf Arab states rely extensively on overland pipelines
The Wall Street Journal (gated) followed up on this with snippets from other bank analysts:
- Lack of oil supply disruption: No major interruptions have occurred, and this "explains much of the sanguine response in the oil market," wrote Caroline Baine, chief commodity strategist at
- Capital Economics says there have been no major interruptions to oil supply
- Macquarie says the Houthi attacks are about crating fear, not about inflicting significant damage to specific targets
- Deutsche Bank cite improved missile defenses in the region that may reduce the likelihood of damage to oil production facilities
Standard Chartered take a less optimistic view:
- traders have perhaps become too complacent ... there is an increased risk of a more direct U.S.-Iran confrontation in any of several key areas across the Middle East and we think that the combination of [Brent below $80 a barrel] and low volatility does not adequately capture that risk.
Red Sea
