Refined oil products at risk as escalating US Iran conflict strangles energy supplies | The Business

The fragile ceasefire between the US and Iran collapsed in acrimony a week ago, with any hope of a speedy resolution fading. Amid an exchange of a missiles, Tehran is warning of an "existential war" and there are reports Donald Trump is leaning towards expanding US military operations, potentially considering boots on Iranian soil.

Michael Every is the global strategist for Rabobank and he argues it's an existential war for the US as well "because it's very difficult to be the global hegemony and... beat a regional power with not much military behind it."

The choke point in the Strait of Hormuz continues to strangle energy supplies. That's seen the Brent crude oil price spike over ten per cent in just days, to (at the time of recording around ) $85 US a barrel.

Michael Every says at these levels, the oil price is in line with Rabobank's Joe DeLaura's own forecasts. But that's only part of the story, its the cost of refining that should be of concern. He says, "it's not the price of Brent that matters, it's what we call the crack spread, it's what it actually costs to turn a barrel of oil into a barrel of diesel or gasoline." Michael Every says there's a long queue of crude lining up for limited refineries globally.
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