Natixis IM Solutions portfolio manager Jack Janasiewicz has warned that oil prices remain a critical factor influencing risk assets as conflict unfolds in the Middle East. The scope and duration of any potential spike in crude oil prices will significantly impact market stability in the short term. Natixis Investment Managers is an asset management company affiliated with Natixis, a French corporate and investment bank. Natixis IM offers investment solutions to institutional and retail clients.
According to Janasiewicz, political sensitivities in the United States regarding fuel costs could limit further escalation. With midterm elections approaching in November, the affordability of fuel will be a key concern for voters. The US administration’s tolerance for sustained increases in oil prices is likely to remain low, given the potential impact on consumers.
Janasiewicz noted that OPEC+ had flagged a 206,000 barrel per day output increase in April. Additionally, Washington has not indicated any plans to tap into the Strategic Petroleum Reserve, suggesting a degree of confidence regarding the global supply situation. He also believes it is highly unlikely that the US or Israel would target Iran’s oil infrastructure, further reducing the risk of a prolonged supply shock.
The Strait of Hormuz remains a key area of concern, with approximately 14 million barrels of crude oil per day, or roughly 32 per cent of global seaborne crude, flowing through the passage. The volume and duration of any disruption to this vital shipping lane are critical factors. Countries such as India, China, Japan, and Korea are particularly vulnerable to any prolonged disruption of oil supplies.
