Why the Price of Oil, Beef, Electricity, and Everything Else Makes No Sense

Summary of Why the Price of Oil, Beef, Electricity, and Everything Else Makes No Sense

by Bloomberg

30m•May 18, 2026
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Overview of Why the Price of Oil, Beef, Electricity, and Everything Else Makes No Sense

This live Odd Lots episode, recorded in London with commodity experts Javier Blas and Lorcan Roche Kelly, examines why today’s price action across oil, electricity, food, fertilizers, and livestock feels “wrong” compared with past crisis periods. The big takeaway: markets are not behaving like a classic supply shock in the same way they did in 2022. Instead, a mix of stockpiles, demand destruction, trade policy, and shifting consumer behavior is muting some prices now while setting up bigger disruptions later.

Energy Markets: Oil Is High, but Not as High as Expected

Strait of Hormuz risk and oil pricing

  • The conversation starts with the risk around the Strait of Hormuz and whether Europe could run short of jet fuel.
  • Blas argues that:
    • Europe is okay for jet fuel in the near term, but the market tightens if the Strait remains closed.
    • The big surprise is that oil is not yet at the extreme levels many expected, despite the geopolitical shock.
  • Why oil is not at $200:
    • Strategic petroleum reserves and pipeline rerouting have helped.
    • There has already been substantial demand destruction—roughly 5 million barrels per day, or about 5% of the market.
    • Demand destruction has been uneven globally, and the pain has not yet forced a full market capitulation.

OPEC and the UAE’s break with the group

  • Blas calls the UAE’s move away from OPEC one of the biggest challenges the cartel has faced.
  • The key issue is that:
    • The UAE wants to produce significantly more oil.
    • OPEC only works if members are willing to withhold barrels and absorb the pain.
  • He suggests OPEC may be entering a period where market-share competition becomes more important than quota discipline.

Electricity: The Bigger Energy Story

  • Blas argues that people focus too much on oil and overlook electricity, which is now the more important energy input for the modern economy.
  • Compared with 2022:
    • European wholesale electricity prices have come down from the extremes.
    • But electricity still underpins the service economy and business activity.
  • He recalls how severe the 2022 shock was:
    • Some businesses saw monthly power bills jump from hundreds of euros to thousands, creating real bankruptcy risk.
  • Main point:
    • Oil matters, but electricity is what really makes the world tick.

Food and Agriculture: Abundance Now, Pain Later

No immediate food shortage

  • Roche Kelly says the world is currently flush with food:
    • Plenty of wheat
    • Plenty of milk
    • Plenty of poultry
  • The one major exception is beef.

Why food inflation is delayed, not gone

  • Current food price pressure is often driven by transport and logistics costs, not raw production shortages.
  • The real pain will show up later because farmers make planting and breeding decisions today that affect supply 6–12 months ahead.

Fertilizer and the CBAM effect

  • A major theme is Europe’s Carbon Border Adjustment Mechanism (CBAM) and its effect on fertilizer.
  • Because the policy was expected to raise import costs, farmers and merchants bought heavily in advance.
  • Result:
    • There is now a fertilizer stock buffer in Europe.
    • That has temporarily softened the impact.
  • But the speakers stress this is delay, not resolution:
    • Once inventories run down, fertilizer will likely be more expensive.
    • Global competition for supply is also increasing, especially from countries like India.

Why farmers are unhappy

  • Farmers face tight margins, often below 1% net.
  • In 2022, fertilizer prices rose sharply, but crop prices rose too, cushioning the blow.
  • This time:
    • Fertilizer is up,
    • but corn prices have barely moved.
  • That means the farmer’s spread has turned negative, which is a much worse situation.

Beef: The Most Acute Food Market Problem

Too few cattle

  • The speakers agree the beef problem is simple:
    • Too few cattle
    • Too much demand
  • U.S. cattle inventories are at their lowest in roughly 75 years.

Processors are not the villains

  • Blas pushes back on the idea that meat processors are “making a killing.”
  • He notes processors like Tyson are losing money on beef processing.
  • The real issue is physical supply, not processor pricing power.

Why beef prices look especially strange

  • The market is segmented:
    • Ground beef in the U.S.
    • Steak cuts for export and other markets
  • So prices move differently across product categories.
  • The overall conclusion: beef is expensive because supply is scarce, and that scarcity may get worse before it gets better.

Dairy, Cheese, and the Rise of Protein

  • Roche Kelly says milk supply is up globally, and dairy markets are under pressure.
  • A major consumer trend is the rise of protein obsession, especially via:
    • whey protein
    • high-protein products
    • quick-service restaurant changes
  • This is reshaping the dairy industry:
    • Producers increasingly want to turn milk into whey and cheese
    • There is likely to be a lot more cheese production ahead
  • His warning:
    • Expect more mozzarella, cream cheese, and processed cheese
    • Aging cheese will become harder to find because producers won’t want to tie up capital for long maturation periods

Trade, FX, and Consumer Shifts

Trade policy matters less than the dollar

  • On U.S.-Europe trade, Roche Kelly says currency moves have done more damage than tariffs or policy headlines.
  • The stronger dollar affected demand and buying patterns more than headline trade fights.

Consumer behavior is changing

  • GLP-1 drugs and broader health trends are changing what people buy:
    • less pizza and fast food
    • more protein-focused foods
  • This is creating second-order effects in food markets, especially dairy and meat.

Big Picture Takeaways

  • This is not a repeat of 2022.
  • Markets are being cushioned by:
    • inventories
    • reserve drawdowns
    • demand destruction
    • pre-buying ahead of policy changes
  • But the episode’s core message is that many of today’s apparent “non-crises” are really crises deferred:
    • oil may reprice higher if the Strait stays disrupted,
    • fertilizer shortages may emerge later,
    • food inflation may show up in the next planting cycle,
    • and beef shortages are already real.

Notable Insight

“This is not a crisis that’s going away. This is a crisis that’s delayed.”

That line captures the episode’s central argument: the market may look calmer than expected today, but the underlying imbalances are still building.