Energy prices could be on the verge of a sharp move higher, and the market may not be fully prepared for what comes next. Richard Haass, president emeritus of the Council on Foreign Relations, has warned that prices could “skyrocket” if the Iran war drags on without a diplomatic breakthrough. In his view, the market has underreacted, largely because the full supply disruption has yet to show up in real time.
Tankers that passed through the Strait of Hormuz before tensions escalated are only now reaching destinations such as Europe. Meanwhile, the pipeline behind them has thinned. As incoming supply slows, the market could quickly feel the strain, allowing prices to move higher with little resistance.
