Javier Blas on Why Oil Could Go Much, Much Higher

What It Covers

Bloomberg commodities columnist Javier Blas analyzes the Strait of Hormuz closure's impact on global oil markets, explaining why Brent crude at $115/barrel understates the true crisis, why Singapore diesel approaching $200/barrel signals deeper structural stress, and how geographic distance from the strait determines when each region feels the full shock.

Key Questions Answered

• •Refined products vs. crude benchmarks: Tracking Brent crude at $115/barrel misrepresents actual market stress. Singapore diesel benchmark, which prices Southeast Asian supply, is approaching $200/barrel — an all-time record. Consumers and businesses should monitor refined product prices, not crude benchmarks, to gauge real economic impact on transportation, manufacturing, and airline ticket costs.
• •East vs. West of Suez timing gap: Countries within days of the Strait of Hormuz (India: ~1 week sailing time) feel supply disruptions immediately, while The Philippines (~15 days), Europe (~3 weeks), and the US (~40 days for Saudi crude) face delayed impact. Businesses dependent on Middle East oil should use this timeline to anticipate when their regional supply crunch arrives.
• •Buffer stocks masking true shortage: The crisis entered with an oversupplied market, floating storage, and mobilized strategic reserves globally. These buffers are suppressing panic pricing temporarily. Blas estimates 8–12 million barrels per day — roughly 10% of global supply — is disrupted. Once buffers deplete over coming weeks, prices must move significantly higher unless the conflict resolves.
• •US natural gas insulation: US natural gas trades below $3/MBTU, near a six-month low, because limited liquefaction capacity traps North American supply domestically. This insulates US heavy industry, electricity generators, chemical companies, and fertilizer producers entirely from the global energy crisis — a structural advantage absent even during the 2022 Russia-Ukraine commodity shock when US gas hit nearly $10/MBTU.
• •Electrification without decarbonization: Asian economies are simultaneously accelerating EV adoption and ramping coal generation to reduce Middle East oil dependency. Countries including Japan, India, and Pakistan are adding coal capacity immediately, with solar-plus-battery storage as the medium-term replacement for LNG. Investors and policymakers should expect carbon-intensive electricity production to rise even as oil consumption in transport declines.