- The oil market could remain distorted long after the Iran war ends, David Roche says.
- The bearish strategist thinks the world is facing a 10% energy supply shortage even with a peace deal.
- The lack of available supply could cause the world economy to contract by 3%, he estimated.
Oil markets aren't going back to normal even when the US and Iran hammer out a lasting peace deal, according to one permabear.
David Roche, a strategist at Quantum Strategy who is known as "Dr. Doom" for his persistently bearish calls on markets and the economy, said he believedsupply disruptions in the oil marketcould persist long after the Iran war officially ended. That's because flows through the Strait of Hormuz are unlikely to revert back to normal even after the conflict ends — a problem he thinks could spark energy shortages and dent global economic growth in a few months' time.
Though the US has asked Iran to reopen the Strait, Tehran is unlikely to completely loosen its grip on the critical shipping passage, Roche said. Controlling the Strait gives the nation power over other Gulf countries, he added.
Roche also pointed to Iran'stolling of shipspassing through the Strait, another reason global supplies could remain crimped after the conflict ends.
Even if the US were to declare "victory" and exit the region, the world will likely face a 10% supply shortage in oil and gas, Roche estimated.
"The tankers would not flow the same way as they should. The oil would not flow the same way. Why? Because by going home, the US would leave Iran and the IRGC in charge of the Gulf. And then, only the ships that they like or who pay them enough will export oil," Roche said, speaking to CNBC on Wednesday about his outlook for the oil market.
"I think that actually, that solution is not a solution at all," he added of a US-Iran peace deal.
Roche said he sees the oil shock moving into a new phase, in which consumers will start to feel the pain of actual oil and gas shortages beyond simply paying higher prices at the pump. That could hit the global economy as people have no choice but to pull back on consumption, he said, noting that the last "normalized" tankers leaving the Gulf have likely already reached their final destinations.
The lack of fuel could cause global GDP to decline by 3% in several months' time, he estimated.
"There are no more on the way," he said of oil supplies from the Gulf. "So essentially, the pipeline is dry."
Markets have rebounded sharply on hopes that a resolution is coming in the Middle East, particularly as the US and Iran have extended their ceasefire deadline this week. But negotiations to end the war are still ongoing, and the timeline for a formal peace deal remains uncertain, with President Trump saying on Tuesday he was waiting on a proposal from Iran to end the conflict.
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