Oil fell to $80 at best, but that’s still a different world

In the best-case scenario, oil would fall to $80, but the CEO of one of the world’s largest independent financial advisory and asset management organizations predicts it is “a different world” than before the US-Iran war.

Nigel Green’s dire prediction devere groupBrent crude rose more than $120 a barrel this week to hit a new conflict-era high, under advisement of $14 billion, following the US-led blockade of the Strait of Hormuz, a sea corridor that carries some 21 million barrels per day – about a fifth of global oil consumption.

Nigel Green says: “Even if oil gets back to $80, I suspect markets are not going to go back to the conditions that existed when crude traded at $60 earlier this year.

“There has been a structural reset, and it is being driven by deliberate major global political strategy on multiple fronts, not just supply disruptions.”

Prices have risen from around $60 in January to above $100 before the latest increase, with the rise to $120 reflecting both physical risks to supply and an increase in the geopolitical premium. Shipping costs through the Gulf have increased, with war risk insurance reportedly multiplying in recent weeks, while re-routing increases time and costs for global deliveries.

“Moving forward, the Strait of Hormuz can no longer be treated as a neutral passage.

“About 20% of the world’s oil and a significant portion of LNG flows pass through it. Intervention on that scale forces a complete reassessment of risk across energy markets.”

Donald Trump is using the blockade as leverage in his confrontation with Iran, directly involving energy supplies in geopolitical negotiations.

The temporary ceasefire announced a few weeks ago has done little to restore confidence in the uninterrupted flow of air traffic.

Nigel Green explains: “Oil is now part of the negotiation toolkit, which changes everything. Prices are no longer simply reacting to events; they are reflecting intent.

“This introduces a sustained premium, which we expect the market to remain at a level.

“A drop to $80 would still leave oil about 30% above levels seen at the beginning of the year. For the global economy, this would have immediate consequences.”

The International Energy Agency estimates that every $10 sustained increase in oil prices adds about 0.2 percentage points to global inflation, contributing directly to transportation, food and manufacturing costs.

“Even an $80 oil price still pushes inflation to levels that central banks cannot ignore. This tightens financial conditions, squeezes consumers, and forces policymakers to keep restrictive settings in place longer than the market expects,” says the Deavere CEO.

The development scenario is also changing. Higher fuel costs are already filtering through supply chains, increasing input costs for the industry and squeezing margins. Import-dependent economies such as China, Japan and much of Europe face a heavier burden, while US producers benefit from domestic production strength.

“Energy-importing economies are exposed in a way that is immediately visible in the trade balance and corporate earnings. This is a material headwind.”

Global spare production capacity, concentrated primarily within OPEC+, remains limited relative to potential disruption scenarios.

Nigel Green says: “There is no quick fix on the supply side. Excess capacity exists, but it is not enough to neutralize a prolonged disruption of this scale. This reality reinforces the higher floor for prices.”

Financial markets, which were positioned to reduce inflation and improve growth conditions, are being forced to rapidly adjust. Energy equities have outperformed, while sectors dependent on transportation and logistics remain under pressure.

Re-evaluation is already taking place. Energy producers, commodities and assets with strong pricing power are finding support. Low margin areas are being rigorously tested.

The broader change extends beyond oil. The strategic use of trade routes, sanctions, and supply chains is becoming more evident in global geopolitics, leading to increased market pricing of political decisions.

Governments are responding by accelerating energy security strategies, including storage, diversification of suppliers, and increasing investment in domestic production and alternative energy sources.

Nigel Green concluded: “A drop to $80 will be presented as a stabilization point, but it is fundamentally a different pricing world.

“The era of assuming stable, uninterrupted energy flows is over. Oil is now part of geopolitical leverage, and this shift is setting a higher and more stable floor beneath the market.”

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