How to think about the Iran war and what it means for oil and stocks

Yes, an end to the Iran war remains elusive – but that doesn’t mean investors should wait around for it.What if talks fail? Won’t inflation skyrocket? Shouldn’t I wait for this to pass before buying stocks? Those are key questions I have been getting as this conflict drags on.They’re understandable, but they’re also expensive.Since my March column, America “double blockaded” the Strait of Hormuz.

Yet little changed.The US blockade only affects Iranian exports and imports.

Iran’s oil went mostly to China which, by the way, had stocked up beforehand.Meanwhile, Strait workarounds proliferate.Saudi Arabia’s East-West pipeline exports were under 800,000 barrels per day pre-war.

Now, they’re over 5 million.Abu Dhabi’s Fujairah Port exports jumped 40% in March to 1.6 million bpd.

Both let Gulf oil circumvent the Strait.This is true even with jet fuel.Worst-case scenarios of mass cancellations and soaring airfares don’t just assume the Strait won’t open – they hinge on no new supply elsewhere.

China is resuming exports.Refiners elsewhere push capacity higher.

The EU’s smart move to American kerosene quashes fears of cancelling summer Continental holidays.The world is working.Non-Gulf energy producers also are pumping more.

April US oil exports hit all-time records.Venezuela is ramping up shipping.

Countries reliant on Qatari natural gas – like South Korea and Italy – are buying more from America and Australia.Asian nations are refiring coal power plants.

Shortages will be short-lived.What about Tehran’s tolls? Some fear Iran charging $1 per barrel – roughly $2 million per ship to pass through Hormuz.But marginal gulf oil production costs average about $20 per barrel.

Another dollar isn’t much.Note, also, a Japanese tanker passed tollfree on April 29.  Will more?If Iran successfully implements a pay-for-passage plan, and somehow jolts prices, it is temporary.

Higher prices would spur even more production globally.Soo...