Energy Aspects

Sean M. Maher on Oil Markets, Iran and the Long Path to Normalisation | EA Forum Ep. 17

In a March interview, Phillips 66 chief economist Sean Maher explained how the Iran‑related closure of the Strait of Hormuz is reshaping oil, product and gas markets for the medium term. He warned that the disruption will keep crude flows abnormal through the end of the year, with each additional day of closure effectively adding another month to the normalization timeline. Maher highlighted a 300‑400 million‑barrel drawdown in global inventories, elevated freight differentials and a 20 % loss of LNG capacity that will keep natural‑gas prices high for years. He noted that U.S. refiners are largely insulated—over 99.5 % of Phillips 66’s feedstock comes from the Permian—but will face higher crude prices and tighter product markets as Asian buyers pull barrels from the U.S. West Coast. Specific examples underscored the strain: VLCCs for Asian crude are scarce, forcing Aframaxes through the Panama Canal; freight differentials are trading $30 over Brent; and the Jones Act waiver is being used to move product to the Northeast. Maher stressed that operational reliability and flexible logistics are now critical competitive advantages. The broader implication is a structurally higher price environment for crude, refined products and gas, with the U.S. playing a pivotal export role while grappling with logistical bottlenecks. Market participants must adjust inventory strategies, secure long‑term freight contracts and prioritize asset uptime to navigate the prolonged disruption.