Today's oil price is still wrong and too low, says Amos Hochstein

Global energy markets face severe instability as oil prices rise following drone attacks on Saudi Arabia’s East-West pipeline, a critical bypass for the Strait of Hormuz. Amos Hochstein, TWG Global Managing Partner and former Biden White House Senior Advisor, argues that current market prices for WTI and Brent remain artificially low compared to the physical market, where barrels trade between $120 and $150. Scarcity in refined products is even more acute, with diesel prices reflecting the equivalent of $200-per-barrel oil. The situation is further strained by the depletion of the Strategic Petroleum Reserve and Houthi control over key maritime chokepoints like Bab al-Mandab. Additionally, Ukraine’s successful strikes on Russian refineries have eliminated Russia’s 11% share of global diesel exports, forcing the country to become an importer and further tightening global supplies while the U.S. administration appears to lack a clear intervention strategy.