Rabobank's Global Strategist Michael Every reports that the ongoing conflict, referred to as Gulf War 3, and the closure of the Strait of Hormuz have resulted in oil prices rising approximately 60% above pre-war levels [1]. The impact is particularly acute for specific products such as diesel and jet fuel, with shortages most pronounced in Asia [1]. Other commodities affected include bunker fuel, fertiliser, naphtha, sulphur, and helium, with availability issues emerging in various locations [1].
Rabobank warns that if the conflict persists for months, the resulting energy shock could rival both the Covid-19 epidemic and the oil crises of the 1970s combined, especially if supply-side disruptions from war and oil-well shut-ins worsen Gulf energy flows [1]. The bank's current base-case scenario anticipates the war ending in 2-3 weeks, primarily on US terms, followed by a gradual normalization of energy markets. However, the geopolitical landscape is expected to remain altered regardless of the outcome [1].
Rabobank also highlights significant 'fat tail risks,' indicating the possibility of extreme outcomes if the situation deteriorates further [1].
CONCLUSION
The closure of the Strait of Hormuz has led to a sharp 60% increase in oil prices, with severe shortages in key products like diesel and jet fuel, especially in Asia. Rabobank cautions that a prolonged conflict could trigger an unprecedented energy shock, with lasting geopolitical consequences even if energy markets eventually stabilize.