Oil prices surged due to the Iran war, and market nerves are on edge, with alarms sounding for an &#34;energy crisis.&#34; However, Bloomberg columnist Javier Blas believes that these concerns are overstated—at least for now.
On March 6, Javier Blas wrote in the Bloomberg Opinion column that the current impact on the energy market is limited, the price increases are moderate, and the duration is still short, which is far from a true energy crisis compared to historical events.
The article states, the U.S. military strikes against Iran are bad news for the global economy, but he does not believe this shock will trigger inflationary turmoil like in 2022. Brent crude oil is currently hovering just above $80 per barrel; European natural gas prices are around €50 per megawatt-hour, which, although nearly doubled from a few days ago, is still a far cry from the historical peak of €350 per megawatt-hour in 2022.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3c1c375b-1653-43fb-9a50-1a1df90ca07a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/3c1c375b-1653-43fb-9a50-1a1df90ca07a.png"/>
It is noteworthy that this shock currently only affects two types of commodities: oil and liquefied natural gas, while coal, electricity, and the North American natural gas market have not been significantly impacted. Blas warns that the real risk to watch is in refined oil prices—diesel and aviation fuel prices have already risen significantly faster than crude oil itself; if the situation continues to deteriorate and spreads to a broader range of energy products, a crisis could truly take shape.
<h2>What Constitutes a True Energy Crisis: Three Essential Elements</h2>
Blas establishes an analytical framework for &#34;energy crisis&#34; at the beginning of the article. He believes that to determine whether an energy crisis exists, three core factors must be considered: the types of affected commodities, the magnitude of price increases, and the duration of those price increases. Additionally, the starting price level and the fundamentals of supply and demand must also be taken into account.
At the same time, Blas believes that historical references are equally indispensable. The article points out,
<blockquote>
During the oil crisis of 1973-1974, oil was almost the only energy source, accounting for nearly 25% of global electricity generation; today, this proportion has dropped to less than 3%.
For ordinary households in Europe, the importance of electricity and natural gas is no less than, or even exceeds, that of oil; for service industry businesses, oil prices are almost irrelevant, while electricity prices are key.
</blockquote>
Blas points out that the reason 2021-2022 constituted a true crisis was that the four major energy forms of the 21st century—oil, natural gas, coal, and electricity—experienced simultaneous and significant surges, with high prices sustained for several quarters.
&#34;Many people are still analyzing the energy market using paradigms from another era,&#34; he writes.
<h2>Horizontal Comparison: Current Data Has Not Yet Reached Crisis Thresholds</h2>
The article states that if current prices are compared with those during historical crisis periods, Blas's conclusion is: the current energy market performance is &#34;quite good.&#34;
Currently, Brent crude oil is just above $80 per barrel. After the outbreak of the Russia-Ukraine conflict, oil prices once soared to over $130 per barrel. European natural gas is about €50 per megawatt-hour, while the historical peak in 2022 reached €350
The one-year forward contract for wholesale electricity prices in Germany is currently quoted at €88 per megawatt-hour, down 91% from the historical peak of €985 and lower than levels four weeks ago.
In terms of coal, the Asian benchmark price is around $130 per ton, which surged to $440 in 2022. For U.S. natural gas, the Henry Hub benchmark contract is priced below $3 per million British thermal units, while it reached $14 during the peak of the commodity supercycle in 2008.
Blas emphasizes that the impact of the current situation in Iran is currently limited to oil and liquefied natural gas, and has not spread to the electricity or coal markets, nor has it affected the relatively independent natural gas markets in the U.S. and Canada.
Additionally, the market starting point before the conflict is quite favorable—oil prices are low, and both the oil and liquefied natural gas markets are facing oversupply this year. Some previously unsold Iranian and Russian crude oil are finding buyers, providing a buffer to some extent. For Europe, the timing is also relatively advantageous: hydropower reservoirs are in good condition, and solar power generation will provide significant supplementation as spring arrives.
Despite not being concerned about crude oil prices for now, Blas specifically points out a sector that warrants close attention: the refined oil market.
He explains that only refiners directly purchase crude oil and bear its price fluctuations; consumers and businesses in the real economy purchase refined products such as gasoline, diesel, and jet fuel, and these prices are the actual variables affecting economic operations. Currently, the price increases for diesel and jet fuel have significantly outpaced those of crude oil itself.
&#34;If an energy crisis truly occurs, the root will lie in these refined products,&#34; Blas writes.
<h2>Worst-case scenario: low probability but not to be ignored</h2>
However, Blas does not shy away from extreme risk scenarios. He admits that his worst-case predictions regarding the impact of the Gulf conflict are more pessimistic than those of most analysts.
He describes a &#34;possible but unlikely&#34; nightmare scenario: the U.S. underestimates Iran's will to resist, leading to a three-month blockade of the Strait of Hormuz; Iran, in a bid for survival, bombs key oil facilities in Saudi Arabia, Kuwait, and the UAE; the relevant countries retaliate, destroying Iran's oil industry.
In this scenario, global daily supply losses could reach up to 20 million barrels, lasting for a quarter, followed by a further reduction of 10 million barrels within the next year. &#34;If anyone thinks that in this scenario oil prices will stop at $100 per barrel, I have an oil field to sell you,&#34; he writes.
However, Blas also points out that historically, true energy crises have never been driven by a single event; they are often the result of multiple factors overlapping.
<blockquote>
When the crisis erupted in 1973, U.S. oil production had just peaked, and global demand was out of control; the 2022 crisis was compounded by multiple factors including low French nuclear power output, drought leading to insufficient hydropower, panic buying by the German government, and utility companies' poor hedging strategies. Currently, these overlapping factors have not emerged, and there is rather a certain hedging effect.
</blockquote>
At the end of the article, Blas concludes with a statement: &#34;Extend the timeline of the price chart. Looking back over the past decade, this week's fluctuations do not seem as frightening as they did at first glance.&#34;

BOIL

Analysis points out that a true energy crisis must have three elements: a wide-ranging impact, significant price increases, and a long duration. Currently, prices are far below historical peaks and are limited to oil and liquefied natural gas. At present, Brent crude oil is just over $80 per barrel. After the outbreak of the Russia-Ukraine conflict, oil prices once soared to over $130 per barrel. European natural gas is about €50 per megawatt-hour, while the historical peak in 2022 reached €350

- The article discusses concerns over rising oil prices due to the Iran conflict, with Bloomberg columnist Javier Blas arguing that the fears are overstated for now.  
- Blas indicates that the current price increases are moderate and short-lived, compared to historical energy crises, and that impact is limited to oil and liquefied natural gas.  
- He emphasizes that significant risks may arise from refined oil products, while broader energy markets remain stable, suggesting the situation is not yet a genuine crisis.

Wallstreetcn

First Trust Natural Gas ETF

Us Natural Gas

United States Oil Fund LP

SPDR Energy Select

Pro Ultr Natural Gas

ISHRS S&P Glb Engy

iShares US Oil & Gas Expl & Prod

VanEck Oil Services ETF

Pro Ultr Bloomberg Crude Oil

SPDR O&G Ex & Prd

Don't be scared by the $80 oil price; the real energy crisis may not have arrived yet