Nomura warns of ‘terminal’ oil shortage driving global selloff

Global markets fell on Tuesday as crude oil prices pushed further above $100 a barrel and U.S. Treasury yields hit their highest level since 2007, with Nomura strategist Charlie McElligott warning that cross-asset markets are waking up to an "energy/petrochem shock 2.0" driven by crude shortages he described as increasingly "terminal."tradingview+1

In a note published Tuesday, McElligott said oil remains "the straw that stirs the drink" of the current global macro risk regime, with supply-side pressures compounded by China's pivot from depleting emergency stockpiles to aggressively rebuilding crude inventories — a move he suggested is coordinated with Iran to "turn the screws" on the United States.tradingview

Markets Under Pressure

The fallout was visible across asset classes. According to Reuters, MSCI's ↘ 0.73% main world stocks index fell 0.28% on Tuesday after dropping 0.65% the day before, while Europe's STOXX 600 slid 0.89% to its lowest level since June 12. Brent crude rose past $106 a barrel on Tuesday, with WTI United States Oil Fund, LP ↘ 3.52% climbing above $102, driven by fresh supply concerns including recent attacks on shipping in the Strait of Hormuz and a drone strike that prompted Saudi Arabia to temporarily shut its East-West pipeline.reuters+2

The 10-year Treasury yield approached 5%, with the oil shock feeding directly into the rates story. First Trust noted that August producer prices rose 5.4% year over year and CPI came in at 3.4%, with futures pricing roughly 88% odds of a Federal Reserve rate hike at the September 16 meeting.marketinsiders+1

Central Banks Face a Policy Bind

McElligott argued that central banks are trapped, wielding what he called the "useless 'demand-side' tool of 'policy rate hikes'" against what is fundamentally a supply shock. Bonds, stocks, gold, credit, and crypto are "slowly bleeding out," he wrote, while the U.S. dollar, energy equities, commodity carry, and long-volatility positions remain among the few uncorrelated hiding places.tradingview

The S&P 500 and Nasdaq Composite both declined on Tuesday, extending the prior session's losses.marketwatch+1

Tail Risks Mount

McElligott flagged a potential "left-tail bomb" for the global economy: the possibility that President Trump, "backed into a corner of his own making," could impose U.S. energy export curbs that would devastate energy-dependent European and Asian economies. Both Iran and China, he argued, are incentivized to keep the crisis simmering — and that scenario gains probability the longer the disruption continues.tradingview