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The Energy Crisis Won’t End Right Away (Even if the Iran War Does)
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Oil markets got bearishly excited after the announcement late Tuesday of a cease-fire deal between the United States and Iran. Crude oil prices plummeted by teen-percentage-point amounts in New York and London, turning $110-$115 per-barrel oil into $90-something barrels in a flash.
But that exuberance is misplaced. Even if the tenuous cease-fire were to hold—something that is very uncertain given the continued firing all across the region, as well as the widely divergent understandings in Washington and Tehran as to what the two sides may be talking about—it will take months for energy markets to regain normalcy. That’s especially true for the refined petroleum products people actually use, but even more so for other energy products, such as liquefied natural gas (LNG), which won’t be back in shape for years.
Oil markets got bearishly excited after the announcement late Tuesday of a cease-fire deal between the United States and Iran. Crude oil prices plummeted by teen-percentage-point amounts in New York and London, turning $110-$115 per-barrel oil into $90-something barrels in a flash.
But that exuberance is misplaced. Even if the tenuous cease-fire were to hold—something that is very uncertain given the continued firing all across the region, as well as the widely divergent understandings in Washington and Tehran as to what the two sides may be talking about—it will take months for energy markets to regain normalcy. That’s especially true for the refined petroleum products people actually use, but even more so for other energy products, such as liquefied natural gas (LNG), which won’t be back in shape for years.
The simple fact is that all of the production and refining and exports of crude oil, refined products, fertilizer precursors, and petrochemicals that were lost in March and April are gone forever. That means that prices for........
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