Key Takeaways:
A quick return to pre-war oil prices is becoming harder for investors to justify.Elevated crude prices could feed through to inflation, borrowing costs, and markets.Investors are weighing ongoing supply threats against weakening demand in key economies.Brent crude traded near $93 a barrel after Israel ordered troops deeper into Lebanon, raising concern that clashes with Hezbollah could strain fragile U.S.-Iran ceasefire efforts. Earlier in the crisis, Brent climbed above $112 as markets priced possible disruptions across major energy routes. Green says investors may be too confident that crude will retreat once tensions ease.
“Many investors are assuming oil could quickly fall back toward pre-war levels when tensions do ease,” Green says, cautioning:
“We believe that assumption is becoming increasingly difficult to justify. Energy markets are pricing a new reality in which supply security carries a significant premium.”
The latest move in Brent and West Texas Intermediate, the U.S. oil benchmark, shows how quickly traders reprice crude when Middle East tensions threaten supply flows. Oil remains below crisis highs, showing markets still weigh diplomacy and softer demand. Green’s warning focuses on the longer-term risk: even when fighting eases, the market may keep paying more for secure supply.
Higher Crude Prices Could Hit Stocks, Bonds, Airlines, and CurrenciesGlobal oil demand remains near record highs, above 103 million barrels per day, while spare capacity remains limited by historical standards. That tight balance leaves markets exposed to modest disruptions. Green argues this helps explain why crude may stay elevated after immediate tensions ease, especially with about 20% of global oil consumption moving through the Strait of Hormuz.
Green said:
“We believe a return to pre-war oil prices appears increasingly unlikely in the foreseeable future. Adapting to that reality could become one of the most important portfolio decisions for investors for the next few years.”
