Energy Shock Income?
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Energy Shock Income?
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Here's the problem for markets today as we see it: A Ceasefire Does Not End the Crisis. The market is currently pricing in optimism around a potential 60-day U.S.-Iran memorandum of understanding. Brent retreated from a peak of approximately $126/barrel to roughly $92/barrel by late May 2026 as ceasefire dialogue advanced. This is a significant repricing — but it reflects a misunderstanding of the physical reality. Even in a scenario where Hormuz flows gradually resume in Q3 2026, as the IEA's base case assumes, global oil supply is still projected to be in deficit until the final quarter of 2026. Infrastructure damage to Gulf terminals, pipeline facilities, and refinery feedstock systems means full recovery timelines could extend six months or more beyond any ceasefire. And critically: rebuilding a 500-900 million barrel inventory deficit requires a sustained surplus of approximately +1 million barrels per day over three consecutive years. That surplus does not exist today and will not materialize immediately. We aren't even sure the UAE stepping in aggressively would solve the issues over the next 12 months.