That said, they expect things to get worse from here - Brent (BRN00) rising to at least $120 per barrel over the coming month. And in a scenario where there's a prolonged disruption through the end of June, oil prices could sky upward to some $200 per barrel "all-in," meaning crude oil plus consumption-weighted oil-product premiums. They come up with that number based on the typical relationship between inventory and price, given the world is now without 13.5 million barrels per day, taking out some 400 million barrels per month, due to Strait of Hormuz disruptions.
The firm answers the question of why risky assets have held their own - the S&P 500 SPX is only about 5% from its January highs - despite crude-oil and product expenditure soaring to a $4.6 trillion annualized rate, from $2.6 trillion in January.
"We note (eerily) that it took major risk-exposed assets more than a month to figure out COVID was bad, and it took it even longer for them to figure out Russia/Ukraine was bad," they said. They said one client mused that the supply shock is like the Sun exploding - there's still calm for the eight minutes it takes for the light to reach the Earth.
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