On borrowed time ?

With the geopolitical situation still highly uncertain and free passage through the Strait of Hormuz yet to be restored, oil continues to trade around USD 90 per barrel—well below its April peak of USD 120.

Yet looking at crude oil alone understates the severity of the energy crisis for two reasons.

First, inventories are being depleted, with the US Strategic Petroleum Reserve at its lowest level in 45 years. Second, diesel refining margins are surging. The heating oil–WTI crack spread has risen from around USD 29 per barrel at the beginning of the year to almost USD 97 today—an increase of approximately 237%. Europe is particularly exposed because it remains structurally dependent on diesel imports, while Russian exports and Middle Eastern refinery output are being disrupted.

Diesel sits at the heart of the real economy: transport, agriculture, construction and industry. Its price therefore matters as much as—or perhaps more than—the headline oil price.

The energy crisis is far from over. Are we running on borrowed time?

Against this backdrop, we are maintaining our energy investments in the portfolios.