Orton expects energy prices to remain “higher for longer” due to supply disruptions and logistical frictions, with inflation risks potentially limiting central banks’ ability to ease monetary policy. He remains cautious on broader markets but continues to favour energy assets for their earnings visibility.
These are edited excerpts from the interview.
Q: Do you feel the market is moving toward de-escalation now?
A: What we’re seeing—and why the US market reacted positively—is that we’re starting to remove the left tail of how bad things can get. There are signals from the US and potentially Iran that a deal could be reached.
Watch the full conversation here
A lot of today’s price action reflects multiple factors: Monday’s sharp sell-off created an oversold market, hedges across sectors and exchange-traded funds (ETFs) were unwound, and quarter-end rebalancing played a role after a rough quarter for equities.
I’m more optimistic, but still cautious. I started putting some money to work as the market was washed out, but two to three weeks is still a long time—anything can happen without a deal. The Strait of Hormuz remains closed, and unless it opens, energy prices will remain elevated, a key concern for inflation and the global economy.
Q: If the Strait was open before, why assume it won’t open after the war ends? Will there really be an oil shock?
A: The challenge is uncertainty. We don’t know how Iran will act—there could be tolls or restrictions. G7 nations and Gulf countries remain cautious.
Also Read: Industry will step up to support prices, availability, jobs amid energy disruption: CII’s Mukundan
Recent attacks and signals from the UAE about using force to reopen the Strait suggest it’s not fully open. From an insurance and logistics perspective, movement won’t normalise immediately. Even if it opens, frictions will keep energy prices higher for longer.
Q: Over time, won’t things settle and ease oil prices?
A: Energy is the key transmission channel across markets—rates, currencies, equities, and fixed income. Time may heal some of the disruption, but not all.
There will be an uncertainty premium. The next two to three weeks remain critical without a deal. There’s also congestion, infrastructure damage, and disrupted liquefied natural gas (LNG) and refining capacity.
Oil prices are unlikely to return to pre-conflict levels soon. It may take time to even move back toward the $70–$80 per barrel range.
From an investment perspective, caution is key. I still prefer owning energy assets as higher prices support earnings. The bigger question is how long inflation stays elevated and how that constrains central banks. Rate hikes in the US are likely off the table, and recent Fed communication has helped calm markets.
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