With headlines reporting that oil exports through the Strait of Hormuz are recovering to pre-war levels, it seems that the oil supply chains have stabilized – yet prices and availability don't tell the same story. Over two billion barrels of expected Middle East production have been lost this year, and even with crude exports increasing, refined products, LNG, and fertilizer still lag. What have we learned from the last eight months, with some of the most extreme geopolitical events we've seen in decades and a market that didn't respond as predicted, and what does it tell us about where we're going next?
In this episode, Nate welcomes back oil market analyst Rory Johnston for an update on how the crisis has evolved since April. Rory explains why diesel is now the epicenter of the crisis, with crack spreads running five to six times their historical norm, driven by both the Iran war and Ukraine's strikes on Russian refineries. He also unpacks one of the unexpected moves that lessened the severity of the energy shortage: China's unprecedented 45% cut in crude imports, which he calls the "Beijing Swing." Tying these trends together, Rory and Nate explore how soaring shipping costs have fractured a once-global oil market into regional pockets and how the poorest nations are bearing the brunt of demand destruction.
If markets have stayed calm because they expect a surplus on the other side of this war, what happens if that surplus never arrives? Are depleted buffers leaving markets vulnerable to smaller disturbances that could trigger sudden price spikes? And in a world of growing data opacity and political spin, how can we find trustworthy signals about the physical systems our economies depend on?
Follow along with Rory's charts used in this conversation here. These slides were prepared on October 21, 2026, the day before the recording.
(Conversation recorded on October 22nd, 2026)
About Rory Johnston:
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.
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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