"Veteran analyst Bob McNally sees a mismatch between risk and oil prices, and believes the market remains too complacent despite the recent rise. The president of Rapidan Energy Group points to years of geopolitical crises that didn't bring large-scale disruptions to oil supply, including last summer's U.S. bombing of Iran's nuclear sites and Russia's invasion of Ukraine. There's a "boy who cried wolf effect," McNally said."
"McNally notes that Brent soared to over $120 per barrel within weeks of Russia invading Ukraine in early 2022. Russia's oil exports were roughly a fifth of what moves through Hormuz, yet the current price rise is more muted, he points out."
"Tanker traffic through the Strait of Hormuz - which handles a whopping fourth of the world's seaborne oil - has vastly reduced. And the battle expanded this week to reach other energy infrastructure. Debris from an intercepted drone strike damaged Saudi Arabia's huge Ras Tanura refinery, the kingdom's state news agency said."
Brent crude currently trades around $81 per barrel, up 11% following regional escalation, but analyst Bob McNally argues the market underprices geopolitical risks. Historical precedent shows past crises—including Iran bombing and Ukraine invasion—failed to cause major supply disruptions, creating a "boy who cried wolf effect." Tanker traffic through the Strait of Hormuz has significantly reduced, and recent attacks damaged Saudi Arabia's Ras Tanura refinery and halted Qatar's LNG production. McNally notes that Russia's 2022 invasion triggered $120+ oil prices despite Russia exporting only one-fifth of Hormuz volumes, suggesting current price movements remain muted relative to actual supply risks.
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