Oil Rises With US-Iran War Negotiations at Impasse; UAE Will Double Oil Pipeline Export Capacity

Added: 2026-05-15

[00:00:00]Brent, uh hovering just below $109 a barrel. It did get beyond that point earlier today before pulling back. Let's bring in Rob Barnett. He is our senior energy and commodities analyst joining us from Miami. Rob, um is this simply a case of investors refocusing on the fact that the Strait of Hormuz remains uh not open and, you know, the Donald Trump Xi Jinping summit was kind of a nice distraction for a while. There were a lot of hopes that there would be progress made, but without any kind of concrete details, everyone's refocusing on what's not happening.

[00:00:34]Exactly. I you know, it when we were watching the headlines from President Trump's visit to China, we didn't really see anything on the energy side to change the narrative much. And when you zoom back out to the oil market with the Strait of Hormuz closed, uh thank goodness we have inventories and we're drawing something like 5 million barrels per day out of those inventories. And every single day we uh get closer and closer to uh depleting what stocks we have. And until until we have the strait reopen, you you're going to be in deficit mode. And even once you get it reopened, it's going to take a long time to sort of normalize things and replenish some of those inventories and stocks. So, Rob, I count me in the camp I'm kind of surprised we're not higher, like a lot higher because it goes to the issue you were just mentioning.

[00:01:25]Whatever inventories we had, either on land or floating around somewhere in on some ocean somewhere, those have got to be getting down to dangerous dangerous levels. What do we know about the just global inventories?

[00:01:37]Yeah, so I I think you're right. And so to to frame the pricing question, I think if if you had proposed this idea of a of a shock uh before the conflict where the Strait of Hormuz was closed and sort of asked people to sort of speculate on what prices would look like, I I they would have said much higher than where we are today, and that is really because oil demand in the short run is very inelastic. There's not much you can do.

[00:02:07]Maybe over time you could buy an electric vehicle, you could take steps to insulate yourself from that commodity, but in the short run you just have to bear it. And the the real saving grace has been the inventories, but as you note they are sort of rapidly declining. Our estimate is something like 5 million barrels per day coming out coming out from those inventories.

[00:02:32]And so we can continue to go for a while yet, but as if the longer and longer this this crisis holds, the more you have to start thinking about what price is needed to really start curbing demand, and it's not obvious we are at anything near what those price levels could be.

[00:02:52]What kind of price level might that look like for WTI versus Brent, the global benchmark?

[00:02:58]Yeah, I think you know, depending on who you ask, you probably look at numbers north of $150 a barrel. So quite a quite a bit higher than where we are, but the the counter, the thing to keep in mind is once you get prices to that level, you have to start thinking about the macroeconomic consequences cuz this could start to drive you into a recessionary mindset. And so everything right now is sort of based on the idea that the economy is well functioning, but as as oil prices tick up, you might have to challenge your macroeconomic assumptions.

[00:03:34]What are our good buddies in the oil patch in Texas and Louisiana and Oklahoma? What are they doing with the production? Are they taking advantage of some of this and cranking up production?

[00:03:45]Yeah, it's a good question, and I think you are seeing some shifts starting to occur where where maybe you're going to see CapEx start to tick a little higher. Folks might be thinking, particularly here in the US or North America generally, if you look up to our neighbors in Canada, you you could start to see a growth mindset occur, but that's not universally appreciated. Many of the large EMPs are still very focused on shareholder returns versus boosting CapEx. What I will say though that's quite interesting outside of this region is big news item from today is that the UAE is planning to double its pipeline capacity by next year. That would allow them to bypass the Strait of Hormuz. So, I do think we're seeing a lot of clever things like that happening in the market that will probably have longer-term implications, but if these things sort out over years instead of months when you're talking about something like that. Yeah, and I know Paul was asking because he wants to fulfill his land man ambitions, right?

[00:04:56]>> [laughter] >> He's been talking about this for a while now. Very quickly, Rob, you mentioned that the UAE looking to you know, increase its use of pipelines.

[00:05:03]Canada has talked about this as well, but again, when we say that these are years long moves, are we talking you know, two to three years or something more akin to eight to 10 years?

[00:05:14]Yeah, so the UAE is moving very fast.

[00:05:19]We were talking about it on the team and you know, just the the idea that you can get a pipeline permitted built within a two-year time frame cuz they're talking by 2027.

[00:05:31]I think when you come to North America and think about the pipeline landscape, things just do not move nearly as quickly. So, I know Canada is very interested in boosting its pipeline capacity. They could have higher volumes, Uh things are probably not going to move in a 2-year or 18-month timeframe up in Canada. Rob Barnett, Bloomberg Intelligence senior energy and commodities analyst on what we're seeing in the oil patch. And of course, oil prices are elevated today and for the week. WTI up about 3% at 104 a barrel. Brent uh did get to pass 109, but just below it at uh the current moment. Now up about 2.7% US stock