Energy hoarding will keep oil prices high even after the Iran war ends, a top consultant says

• Bob McNally, founder of Rapidan Energy Group, says a key pillar of the oil market has collapsed.
• Markets are adjusting to the idea that the US will not always secure the flow of oil in the Middle East.
• Nations could beging hoarding ebergy supplies, leading to a "security premium" for oil, he said.

A key assumption in the oil market for decades has been dismantled by the Iran war, and it could lead countries to hoard energy supplies, a consultant said.

Bob McNally, the president and founder of Rapidan Energy Group and a former White House energy advisor, said he believes that one "load-bearing assumption" has been upended with the Iran war. In his view, markets are coming to the realization that the US will always secure the flow of oil in the Persian Gulf, an assumption that has been a stabilizing force in the oil market for decades.

The change could result in a "mad scramble" for strategic oil reserves, with nations around the world refilling their stocks and hoarding supply, McNally said. The rush to build up stockpiles will likely push the price of oil higher, he added, though he didn't have a concrete price forecast.

"The world will have been taught a lesson about energy security," McNally said in an interview on Monday. "Having learned that lesson, India, South Korea, Japan, China, even the US, we are all going to be refilling. We're going to refill the strategic stocks we drew down during the crisis, and I think countries are going to want to hold higher inventory than they did before, because they're going to fear a repetition of this nightmare."

Markets have seen episodes of oil hoarding in the past, such as when crude prices spiked and rocked the global economy in the 1970s.

Some nations have already built up larger oil reserves in recent years. Stocks are being drawn down amid the sudden supply shortage in the Middle East, but are being built up in other areas as nations try to protect themselves from an extended supply shortage.

China, the world's largest oil consumer, has most aggressively built its stockpiles, with the nation ending 2025 with 1.3 billion barrels in strategic oil inventories, according to estimates from the US Energy Information Administration.

Global observed oil inventories plummeted by 85 million barrels in March, though inventories in the Middle East and in China grew, according to an April report from the International Energy Agency.

Buying activity is also starting to pick up, even as governments around the world scramble to ration oil and fuel usage. The US, one of the world's largest crude exporters, has seen oil sales surge 17% since the start of the Iran war, according to weekly export data from the EIA.

Oil prices have soared throughout the war. Brent crude, the international benchmark, has been creeping back toward wartime highs. It traded around $116 a barrel on Wednesday, up 90% for the year. West Texas Intermediate crude traded around $103 a barrel, up 80% year-to-date.

McNally said he believes oil prices are reflecting an overly optimistic scenario about the Iran war and the outlook for global supply. In his view, the US has just a one-in-five chance of striking a peace deal with Iran that will open up the Strait of Hormuz, he said, suggesting it was more likely the US would need to open up the Strait by force.

"The Middle East has been disrupted and now we'll have a security premium attached to it," he said of prices going forward.