Oil prices have traded modestly higher over the past week, but renewed unrest in Iran has drawn attention back to geopolitical risks that could quickly disrupt global energy flows. Investors are closely watching the Strait of Hormuz, a critical chokepoint for oil and natural gas shipments, as tensions escalate.
BNN Bloomberg spoke with Rob Thummel, senior portfolio manager and managing director at Tortoise Capital, about why geopolitical risk remains largely absent from oil prices, how supply disruptions could change that quickly, and where crude prices may head over the longer term.
Key Takeaways
- Geopolitical risk remains largely unpriced in oil despite rising tensions in Iran and other producing regions.
- Any disruption to the Strait of Hormuz could have an outsized impact, as roughly 20 per cent of global oil and LNG flows pass through the waterway.
- A full and prolonged closure of the Strait is considered unlikely due to Iran’s reliance on oil exports and international security presence.
- Short-term supply disruptions or rising geopolitical anxiety could still push oil prices several dollars higher.
- Over the longer term, reduced U.S. production and stronger demand could gradually lift oil prices toward the low US$70 range.
Read the full transcript below:
ANDREW: Let’s take a look at a one-week chart for oil and see how crude in North America has fared. As of today, it’s up about one per cent — not a massive move, but you can see that modest gain over the past week. There was a spike earlier amid fears, among other things, that the United States might launch an attack on Iran following the killing of protesters.
Let’s get more from Rob Thummel, senior portfolio manager and managing director at Tortoise Capital. Thanks very much for joining us. It’s interesting that we have two geopolitical stories simmering right now — Venezuela and Iran.
ROB: You’re right, Andrew. There are two, but there’s probably close to zero geopolitical risk embedded in crude oil prices at the present time. From our perspective, that creates the potential for oil prices to rise simply because these geopolitical concerns seem to be increasing almost daily.
ANDREW: That’s interesting. We’ve heard for quite a while that the oil market seems remarkably calm about geopolitical risk. You don’t think even a modest risk premium is creeping into crude right now?
ROB: Maybe a very mild one, but not much. If you think about what could happen, it really comes down to geography — particularly with Iran and the Strait of Hormuz. As many viewers know, the Strait of Hormuz is critically important to global energy transportation, especially oil. Tens of millions of barrels per day move through the strait.
If Iran were somehow to temporarily block or disrupt that passage, it would wreak havoc on the global oil market by reducing supply, at least in the short term. Obviously, there are many interested parties — including the U.S., China and others — that want to ensure that doesn’t happen. But the reality is that the Strait of Hormuz is one of the most important transit points for energy commodities in the world.
ANDREW: I’ve heard it said this week that such a move would be a desperate one for the regime in Tehran — something it might only consider if it felt backed into a corner.
ROB: I agree. It would be a last-ditch effort, but it would cause oil prices to rise substantially. A more realistic scenario is the gradual addition of geopolitical risk to oil prices. I think you could see prices move up by a few dollars as tensions continue to rise.
If things were to calm down, fundamentals would still dominate. The global oil market remains oversupplied, which is why prices fell last year. Until there’s an adjustment in supply or stronger demand, oil prices will largely move with perceptions of geopolitical risk.
ANDREW: Where do you see oil heading over the next year? I know that’s almost impossible to answer given all the variables, but do you see crude edging higher despite concerns about a glut?
ROB: We do. A one-year time frame is reasonable to discuss. We look at energy over much longer periods, but I do think oil prices inch higher. We expect less oil production, particularly in the U.S., which should help reduce the oversupply.
From a consumer perspective, lower prices could actually support stronger demand, both domestically and globally, which would also help rebalance the market. Over the longer term, a “Goldilocks” price for both producers and consumers is probably in the low US$70 range. We don’t think we’ll get there this year — prices are more likely to remain in the US$60s — but over time, we do see oil moving into the low US$70s.
ANDREW: I also noticed Mitsubishi, the large Japanese trading company, spending more than US$5 billion to buy into U.S. shale natural gas.
ROB: That shows how investors view natural gas. You and I have talked about this before — at Tortoise, we’re big fans of natural gas in both the U.S. and Canada, particularly because of artificial intelligence.
We think electricity is becoming the new oil, and natural gas and nuclear will be the primary fuel sources. One reason the U.S. can compete in the global AI race is access to low-cost electricity, driven by abundant natural gas — including supply from Canada.
We believe natural gas demand will rise steadily, not just for a few years, but likely for decades. That creates opportunities across the value chain, from producers to pipeline companies to power generators that rely heavily on natural gas.
ANDREW: Rob, we’ll have to leave it there. Thanks very much for joining us.
ROB: Thanks for having me.
ANDREW: Rob Thummel is senior portfolio manager and managing director at Tortoise Capital.
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This BNN Bloomberg summary and transcript of the Jan. 16, 2026 interview with Rob Thummel are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
