Rabobank’s Michael Every and Joe DeLaura argue that the Iran War could accelerate a shift from unified Oil markets towards Balkanised pricing and settlement blocs. They highlight historical precedents for fragmented Oil and gas trade, stress the role of sanctions and swaplines, and warn that future Oil flows may be governed by geopolitics, currencies and security pacts rather than pure market forces.

From one Oil price to many

"Whether the US wins or loses the Iran War, energy supply chains are already moving because of it, and after it is over they are likely to shift significantly further – we are just flagging that Balkanisation is one of the risks ahead."

"Indeed, economic history is replete with deep geopolitical energy price and payment splits, sometimes for years or even decades: the assumed law of ‘one market price’ has not always held and so may not hold ahead."

"As such, we may be moving towards a world where energy is not a fungible number on screens that flows to the highest bidder in a neutral global market, but a strategic asset that moves through geopolitically-constrained supply chains based on security pacts, payment currencies, and swaplines, as for large parts of the 20th century for many economies, and others as of today."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)