Oil markets deeply underestimating Iran conflict: Rabobank's Michael Every

Core Insights - The current oil price does not accurately reflect the availability and disruption in the physical economy, as seen during the COVID crisis when prices remained stable despite empty shelves [1][2] - The rising costs of bunker fuel and jet fuel are significant indicators of the disruption to international shipping and air travel, which could have severe implications for the physical economy if not resolved soon [2][3] Geopolitical Dynamics - The geopolitical landscape is complex, with countries experiencing varying degrees of pain from the current energy crisis, leading to differing motivations for resolution [4][5] - The U.S. may suffer less compared to net energy importers, which could affect its willingness to resolve the situation quickly [6][7] Military and Strategic Considerations - The U.S. is deploying a marine expeditionary unit to Iran, potentially aiming to control critical oil export routes, which could escalate tensions further [9][11] - The control of global choke points is a key aspect of U.S. national security strategy, indicating a potential for increased military involvement in the region [11][12] Market Implications - The expectation that markets will respond rationally to geopolitical tensions may be misguided, as the underlying geostrategic factors are driving market behavior [17][18] - A significant escalation may be necessary before any resolution can be achieved, suggesting that market conditions could worsen before improving [14][18]