Rory Johnston: This is When Oil Prices Will Shoot Higher Demand Destruction

Stijn Schmitz welcomes Rory Johnston to the show. Rory Johnston is Commodity Market Research who specializes in oil and gas. This episode delves into the complex dynamics of the current oil market crisis stemming from the closure of the Strait of Hormuz, exploring the profound implications for global energy supply and geopolitical tensions. Johnston provides a detailed analysis of the current oil market situation, highlighting that approximately 20 million barrels of oil per day typically transit through the Strait of Hormuz, with about 13 million barrels currently disrupted. Despite this massive supply shock, oil prices remain surprisingly low, which Johnston attributes to several factors, including market resilience, slow-moving commodity markets, and complex geopolitical negotiations. The discussion reveals the potential devastating consequences of prolonged strait closure, particularly for developing countries. While advanced economies might absorb price increases, many regions in the global south could experience complete fuel shortages, causing significant economic and humanitarian challenges. Johnston predicts that if the situation continues, demand destruction will become inevitable, potentially forcing prices to astronomical levels. Interestingly, the conversation also explores the nuanced motivations of key players like the United States, Iran, and Israel. Johnston suggests that Iran potentially benefits from prolonging the conflict, while the United States appears increasingly desperate to reach a resolution. He believes the crisis will likely conclude with Iran gaining some recognized control over the Strait of Hormuz. Johnston’s base case scenario anticipates the strait potentially reopening by mid-May, but warns that the market will require months to rebalance. The cumulative oil supply loss could reach over 1.2 billion barrels, fundamentally altering the global oil market’s dynamics. He emphasizes that what was previously an oversupplied market will likely transform into a tighter, potentially higher-priced environment. Timestamps: 00:00:00 – Introduction 00:00:48 – Strait of Hormuz Basics 00:01:55 – Supply Rerouting Efforts 00:02:57 – Total Supply Losses 00:06:09 – Replacing Lost Production 00:08:46 – Demand Destruction Scenario 00:11:15 – Price Reaction Analysis 00:19:23 – Trump’s Market Interventions 00:23:43 – US Treasury Intervention? 00:25:24 – Regional Shortage Timelines 00:30:41 – Global South Impacts 00:32:20 – War Incentives Discussion 00:41:40 – Iran, Trump, & Israel 00:46:11 – Base Case Outlook 00:51:56 – Refinery Fire Concerns 00:55:54 – Wrap Up Guest Links: Substack: X: Rory Johnston is a Toronto-based oil market researcher, the founder of Commodity Context, a lecturer at the University of Toronto’s Munk School of Global Affairs and Public Policy, host of the Oil Ground Up podcast, as well as a Fellow with both the Canadian Global Affairs Institute and the Payne Institute for Public Policy at the Colorado School of Mines. He is a leading voice on oil market analysis, advising institutional investors, global policy makers, and corporate decision makers. His views are regularly quoted in major international media including the Financial Times, New York Times, Wall Street Journal, Bloomberg News, Reuters, BNN Bloomberg, CBC, and Financial Post, and he frequently appears on numerous market and industry podcasts (e.g., Bloomberg’s Odd Lots, Hidden Forces, etc.). Prior to founding Commodity Context, Rory led commodity economics research at Scotiabank where he set the bank’s energy and metals price forecasts, advised the bank’s executives and clients, and sat on the bank’s senior credit committee for commodity-exposed sectors.

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Rory Johnston: This is When Oil Prices Will Shoot Higher Demand Destruction is an episode from Palisades Gold Radio by Collin Kettell.

This episode is 58:01 long.

This episode was published on Apr 22, 2026.

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