The following is an excerpt from an interview with Helima Croft originally published in the July 2026 issue of KT Luxe. Download the full article.
Helima Croft, RBC's chief global commodities strategist, credits her success in part on her work experience at the US Central Intelligence Agency, where she honed her analytical skills and learned to read geopolitical events with a healthy dose of skepticism.
One of the world's most acclaimed energy strategists, Croft took time earlier in July to speak with KT LUXE about the ongoing conflict with Iran, the energy market and what she expects to see in the aftermath of the war.
Energy markets have been too comfortable with the view that the war could be over quickly, she warns. Global oil supply is also "reaching the limits of the safeguards" as the conflict continues and shipping is hampered in the Strait of Hormuz and Red Sea. "I do think I've been more skeptical than other analysts and market participants," said Croft. "Wars are easy to start. They're not easy to exit. And I think that's behind some of my concern and pessimism."
Besides heading the commodities team, Croft leads Middle East and North Africa research at RBC Capital Markets in New York. She specializes in geopolitics. Her team of strategists cover energy, metals and cross commodity investor activity, as well as US and global policy analysis. Edited excerpts from an interview:
I know I'm asking you to look into your crystal ball, but how and when do you expect the war to end?
That is the million dollar question. The question is, are we in a full-war situation? Are we in a situation where we have periodic flare-ups of fighting, followed by temporary truces? I am very skeptical that we're going to get a final deal that encompasses all the nuclear issues anytime soon. Remember, it took years to get Joint Comprehensive Plan of Action (JCPOA) on Iran's nuclear program in 2015. I think it was two years when the negotiation started through the conclusion of that deal. Getting this done in several months is a Herculean task.
Add to it Strait of Hormuz control issues, and it's become exceedingly clear that the Revolutionary Guard has no intention of giving up control. That's now become more important than the nuclear program for re-establishing regional deterrence and generating revenue for reconstruction because we just don't see an easy path to sanctions relief, given the role of Congress in implementing so many of the sanctions on Iran. The US President doesn't have the ability to waive those sanctions, and then there's a whole issue of the frozen funds. Think about the memorandum of understanding (MoU). It was supposed to allow Iran access to its billions of dollars in frozen funds, and those have not really been forthcoming to date. That's part of the reason why we have this latest flare-up. Hormuz control rights is going be a central demand of Iran, and any negotiating process. But right now, it looks like we're back to square one in terms of the war.
There was a false dawn with the MoU in mid-June that people got so optimistic about. I thought of it as a Rorschach test. Everybody saw what they wanted to see. There was not a lot of substance. It contained a wish list that could get both sides to an agreement, but it was not a roadmap for anything really actionable.
How does this continued fighting impact energy supplies?
We had the International Maritime Organization come out and say it's unsafe again for commercial shipping, and we've already seen a dramatic decline in vessels traversing the Strait since the MoU was signed and the flare-up in fighting. The real question is, how many days have we bought with the exodus of ships that we saw right after the MoU was initially signed.
We had 100 million barrels, plus leave the Strait. There had been all of this oil on ships waiting to leave that had been on the water for 100+ days. Ships did leave, so you've got over a month of additional inventory cover. But again, if we're back to square one on the Strait, it only lasts you so long, and we have (the US Strategic Petroleum Reserve at) Cushing (Oklahoma) still near operational lows, the lowest levels we've seen in decades.
We've really been able to weather the storm because of the International Energy Agency (IEA) strategic stockpile release, running global inventories down to operational floors, and China paring back imports dramatically. The question is, if we have restricted flows for another multi-month period, what does China do? Does it keep imports at these low levels? What happens with the US SPR? There's a lot of uncertainty over where we're going to go on price. Our shock absorbers have been run down. We were bailed out by China. Does China want to continue playing that role? We can't overstate the enormous role that China played in averting a serious global economic crisis.
"In our conversations with UAE officials, they've been clear. They are going to be cautious about bringing additional supply to the market."
Helima Croft, Head of Global Commodity Strategy and MENA Research, RBC Capital Markets
Oil prices have repeatedly surprised investors, initially not rising as much as some expected and then falling to surprisingly low levels at other times. Brent futures were trading at nearly $120 per barrel in March and they have been rising again. Where do you see prices going under different scenarios?
If you talk to national companies in the Middle East, they will tell you that they were selling those barrels into Asia in March for about $175. So, there was a disconnect between what the paper market was showing, or what you would see on your Bloomberg screen versus the actual price for those barrels in Asia when the war started. Those barrels were fetching historic highs in March. The paper market, though, has been heavily influenced by very, very successful messaging from the White House that the war was going to be over. There was a lot of optimism bias in the market that the war was going to be quick.
But the question is, can you really lose a billion barrels plus from the market and have no bill to pay? We are reaching the sort of limits of the safeguards in the system. I think that's going be a really telling question in the coming weeks and months, depending on how long this latest flare-up and fighting lasts.
How much time do we have before real shortages happen?
You should watch the products market right now because we've had a number of issues with refineries being struck in the Middle East. Also, if you turn your attention to another conflict, Ukraine has been battering Russia's refineries, and Russia announced products export bans.
I would be watching very, very tight markets for diesel, particularly now into Europe because of what's happening with Russia. US gasoline prices have remained high, even though crude prices fell because refiners are running at full throttle. US exports also ramped up to help avert a crisis, whether it be crude, but also product exports. The US was sending so much jet fuel into Europe because of the initial concerns about shortages. But again, that means that there's no additional refinery capacity anywhere at this point. If there's anything more in terms of refinery outages, we're going to see product pricing really hit.
We're following this Russia-Ukraine story very carefully because diesel is the lifeblood of manufacturing. When you have diesel shortages, that's a real problem.
