Oil Exports Are Back to Prewar Levels. Why Aren't Oil Prices?
Gulf crude export volumes have recovered, but transport routes, costs and risk premiums have not. The export system remains central to the outlook for oil prices.
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Gulf crude export volumes have recovered, but transport routes, costs and risk premiums have not. The export system remains central to the outlook for oil prices.
Diesel has hit a nominal price record even though crude oil has not. High refining premiums, near-full refinery utilisation, thin inventories, and limited overseas supplies help explain the divergence—and the resulting pressure on freight costs and goods prices.
With oil approaching $100, vulnerability depends on both energy buffers and the ability to pay for imports. Ample reserves cannot eliminate the cost of expensive energy.
Break down the freight, insurance and time costs of detours, and trace how those costs reach cargo owners and consumers.
Alternative pipelines can preserve deliveries, but detour costs, other chokepoints and capacity gaps remain.
Energy costs reach consumers through a chain of production, distribution, margins and time lags rather than a one-for-one pass-through.
Oil affects household costs through refining, fuel, transport and retailing, with no fixed pass-through or timetable. Headline and core CPI need to be assessed together.
The dollar index measures a six-currency basket, while the dollar influences commodity pricing, debt burdens and monetary-policy expectations.