Why Middle East Oil Risks Now Exceed US-China Tensions

• US-China strategic competition is currently less of a concern compared to Middle East risks.
• Growing worry over the stalemate in the Strait of Hormuz and its impact on global oil and diesel inventories.
• Elevated crack spreads are contributing to cost-push inflation globally.
• Risk of non-linear market events due to inventory depletion in oil and oil products.

Ashok Bhundia, Deputy Chief Economist at the Institute of International Finance, suggests that geopolitical risks from the Middle East, specifically the Strait of Hormuz, are a more pressing concern than US-China tensions. He warns of dwindling oil and diesel inventories, elevated crack spreads leading to cost-push inflation, and the potential for sudden, non-linear market events.