NAB Morning Call War of words
Mar 12, 2026
Gavin Friend, NAB markets economist and strategist, outlines the oil surge after Iran rhetoric and the IEA’s huge supply shock. He dissects rising bond yields, repriced rate-cut hopes, and US naval escort prospects for the Straits of Hormuz. He also highlights UK fiscal vulnerability and how a tighter US trade balance could reshape Q1 growth expectations.
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Largest Global Oil Supply Disruption
- The Middle East conflict has created the largest global oil supply disruption in history according to the IEA.
- The IEA estimates an 8 million barrels per day drop in March, with flow constraints more important than SPR releases which take months to affect supply.
SPR Releases Won't Fix Immediate Flow Shortfall
- Strategic Petroleum Reserve releases won't quickly replace lost flow through the Straits of Hormuz because release speed is slow.
- US Energy Secretary estimated months for SPR to flow, while Gavin Friend said US Navy escorts might be needed to reopen the strait by month's end.
Rhetoric Makes Straits Closure Politically Driven
- Iran's rhetoric suggests a prolonged closure of the Straits of Hormuz and continued attacks unless their conditions are met.
- Gavin Friend cites Iran's security chief saying the war won't end until Iran agrees, implying duration is politically driven not just tactical.