Tortoise senior portfolio manager and managing director, Rob Thummel, sits down with Yahoo Finance Markets and Data Editor Jared Blikre to share some insights on the outlook for oil (CL=F, BZ=F) and diesel prices, the Strait of Hormuz, and more.
I have heard that the Russians are going to export some diesel, right? Obviously the US has agreed to that. But hopefully some of the Russian refineries can can actually start exporting diesel again to the US. Uh Russia is actually the second largest exporter, believe it or not, of of diesel. So, if we can see that happen again and have that return, then we'll be able to see diesel prices come down a bit because right now, you're right, it's tough. It prices are high. Um but I but I do think there is a line of sight for for lower diesel prices.
Brent nearing $120 a barrel, traffic through the straits of Hormuz really down. OPEC Plus meets this Sunday. And then we got for reports of a US, um, and Israel, they're weighing strikes in Iran after the midterm elections. So, how do you see all this playing out? Do we see higher oil prices as a result?
We probably that that that just really means probably higher oil prices, yes, because of higher geopolitical risk premium. If we continue to have more strikes in Iran, that's going to just keep oil prices longer for for a bit longer. Um hopefully we can get the straight of Hormuz flowing oil again and if that if that happens, then we can see oil prices come down to more more reasonable levels because there's there's there's plenty of oil out there, it's just a matter of being able to get it transported.
Talk to us about the bare case for oil. What needs to happen uh in order for that to happen?
Yeah, so the thing that we keep really close tabs on at tortoise when you get these higher oil prices are, is there demand destruction globally, right? And that that that because oil is involved with so many things in the economy. You mentioned it at the outset. Diesel is involved with so many things in the economy. So if we have a uh higher prices, inflation, you know, higher rates, cause a slowdown in an economy both domestically and globally. That can slow the demand for oil and that can impact some of these energy stocks and cause oil prices to fall.
Yeah, a good point right there. Sometimes higher prices are the cure for higher prices and then you get uh, well, that doesn't really bode well for the economy.