The severe physical shortage in oil markets and uncertainty over what might happen next in the Iran War has caused disruption over oil futures, with the price of a physical barrel of oil being significantly higher than suggested prices in financial markets. The disconnect is especially stark for Brent, the international benchmark. Dated Brent, which Read more
Commodity Prices
The Petrodollar Loop
Petrodollars, simply defined, are oil revenues denominated in U.S. dollars. The petrodollar loop is essentially the global practice of pricing oil exclusively in U.S. dollars rather than any other currency and having those dollars recycled into U.S. assets. So, no matter what country is buying oil, they pay the oil-producing country in petrodollars denominated in Read more
Economic Outlook: Fallout from the Iran War
Markets continue to react to minute-by-minute developments regarding the ongoing U.S./Israeli war with Iran, which has effectively closed the Strait of Hormuz, narrow, strategic waterway in the Persian Gulf through which roughly 20% of the world’s oil and liquid natural gas pass, as well as affecting the global supply of helium, fertilizer, and aluminum. The Read more
War in the Ukraine, Global Economic Consequences
The Russian invasion of Ukraine overturned a lot of expectations on the near-term direction of the global economy. The destructive military action and its subsequent economic and financial ripple effects have become the chief driver of the market’s swift, volatile moves (both downside and upside) since the end of February 2022. This volatility has spiked Read more