Oil Market Impacts from Iran

Bullish:

• $GLD - Gold recommended as highest conviction trade due to central bank diversification and as hedge against geopolitical shocks and negative supply shocks.

  • “Our highest conviction recommendation continues to be gold, both because of an attractive base case where this diversification from central banks into gold continues.”

    Daan·10:06

  • “And then critically, we think gold is a very helpful hedge against geopolitical shocks, against institutional macro policy shocks.”

    Daan·10:15
• $ENERGY - Energy sector positioned to benefit from supply disruptions and geopolitical tensions, with significant upside if Strait of Hormuz disruptions persist.

  • “But clearly, the upside risks are very significant. The upside risks from a sustained closure of the state of Hormuz could be very large.”

    Daan·4:18

  • “And then if you combine it with energy, which hedges you against more traditional negative supply shocks, as an investor, you're pretty well hedged against deflation shocks that can weigh on the performance of equity bond portfolios.”

    Daan·10:23
• $OIL - Oil prices could reach triple digits if Strait of Hormuz disruption extends beyond storage capacity, with market currently pricing in only 4-week disruption.

  • “And we typically find that in oil markets to generate substantial demand destruction, may have to rise into triple digit territory.”

    Daan·5:38

  • “With a market price at $78 the market is essentially pricing in a $13 per barrel risk premium, which on our models corresponds essentially to the market pricing in a full closure of the Strait Of Hormuz for around four weeks.”

    Daan·6:09