Why is oil so cheap? With David Wech

Oil prices remain surprisingly subdued despite geopolitical instability in the Strait of Hormuz because global markets were already structurally oversupplied. Increased exports from the UAE, Kuwait, and Iraq, facilitated by US military protection, have effectively replaced lost Iranian barrels. Furthermore, surging production from the Americas and ongoing releases from the US Strategic Petroleum Reserve have mitigated potential supply shocks. China, a critical driver of global demand, has significantly reduced crude imports by leveraging high existing storage levels, rapid electrification, and a pivot toward coal-based petrochemicals and high-speed rail. These factors, combined with a broader, long-term shift toward energy diversification, suggest that the market can sustain current conditions without immediate price spikes. David Wech, Chief Economist at Vortexa, highlights that while short-term volatility persists, the underlying data indicates that global economies are successfully adapting to these supply-side disruptions.