You’ve been writing a lot about the oil market and how, despite geopolitical tensions, oil prices are unlikely to sustain at elevated levels. But now, with a new dimension—America entering the war—do you think oil will flare up or just see a mild spike before coming back down?
Peter McGuire: Well, I’ve listened to both of your introductions, and I think you’re pretty much on point. The big question on everyone’s mind is: how long does this last, and what’s the time frame? If this turns out to be a short-lived encounter and things return to normal—say, by this time next week—then it’s just a blip on the radar. But if it starts to drag out and becomes a longer-term issue, then that’s a whole different story.
And once you factor in the Strait of Hormuz as a distribution chokepoint for tankers, that really raises concerns among market traders. It could certainly drive prices significantly higher from here. So, at the moment, there are a lot of unknowns.
So, would you say crude prices are likely to come down, or stay elevated for a longer period? Because if they remain high for an extended period, that’s bad news too, isn’t it?
Peter McGuire: Absolutely. We’ve discussed this countless times over the years—inflation is the real curse. If oil prices remain elevated from current levels, that effectively becomes a handbrake for the global economy.
As a market trader, I want to first assess the timeframe over the next 48 to 96 hours—see where we are by Friday. If tensions escalate further and the U.S. and Israel become more deeply involved, that changes the geopolitical footprint and could seriously impact the stability of the Middle East. But if things settle down by then, I’m sure the market will retreat, and retreat fairly quickly.
We’re seeing notes and hearing chatter on the street that if the escalation continues and Iran blocks the Strait of Hormuz, oil prices could spike beyond $100. Do you think this is a realistic scenario? And if it happens, how do you see the world reacting?
Peter McGuire: Well, a couple of points. First off, if that happens—and that’s the big unknown—what will the United States do? Remember, it’s about positioning. You’ve got the UAE, Dubai, Saudi Arabia, and Qatar all right there. The Strait of Hormuz is extremely close to them. The map tells the story—it’s a tight squeeze.
If they want to keep it open, what will it take? Are we going to see U.S. battleships moving through the Strait? Will the Saudis step up their air defense? All of these possibilities are being considered, and this chokepoint is what everyone is nervous about. Everyone wants it to stay open—except maybe Iran in the short term. That’s where tensions will build.
And if the conflict spreads further—say into Yemen and the Strait of Bab el-Mandeb—that adds even more complexity and pressure, especially heading into the Red Sea.
Looking at the broader energy market, despite the weekend’s escalation, we haven’t seen a major spike in energy or gold prices. Do you think the market has already priced in these risks, or is this an underreaction?
Peter McGuire: To some extent, yes, the market has priced it in. But it’s still very fresh, and it has certainly taken the market by surprise. We saw a strong reaction—up 2 to 4% in Asian trade.
Now I’m watching how things unfold over the next 12 hours. As we move into the New York session and Europe comes online—and with India finishing its trading day—we’ll get a clearer sense of the impact. We also have to watch for further geopolitical developments. What are the official commentaries?
And let’s not forget China—the largest importer of Iranian oil. We haven’t heard anything from them yet. If there are supply disruptions, they’ll feel it first. Around 80% to 90% of Iranian oil goes to China. So keep an eye on that.
Overall, yes, we could see another surge depending on how things evolve and how aggressively traders respond. Shorts could get squeezed, and right now, it seems like everyone is positioned long.
