The Oil Market Could Be Weeks From a Breaking Point
Military Helping Move 7 Million Bpd Out of Persian Gulf, Wright Says What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… Three and a half months after the blocked Strait of Hormuz created the worst oil supply disruption in history, oil prices remain below $100 per barrel amid hopes of an imminent U.S.-Iran deal.
It’s not only hopes that have been keeping prices much lower than a sudden disappearance of 13 million barrels per day (bpd) of supply would warrant.
The market has had major buffers to rely on.
China, the world’s top crude importer, slashed imports to multi-year lows, while the U.S.
boosted its crude exports to a record high.
Strategic releases of oil stocks in developed economies have also helped the market through this unprecedented crisis.
But these buffers are now vanishing, inventories are crashing, and the market is just weeks away from an inflection point and a price spike if the Strait of Hormuz remains largely inaccessible to tanker traffic, analysts say.
“From an inventory perspective, we believe that the end of July could be an inflection point for the market if there is no improvement in energy flows from the Persian Gulf,” Warren Patterson, Head of Commodities Strategy at ING, wrote in anotethis week.
This inflection point, without a sustainable improvement in Hormuz traffic, could pushBrent Crude pricesto spike to as much as $120-$130 per barrel this summer.
Such a high price would increase pressure on the U.S.
for a deal, Patterson said.Related: Europe Wary Of Too Much Dependence on U.S.
LNG “And failing a deal, one can’t rule out the possibility that we get to a point where energy-starved buyers are more willing to pay Iran tolls for safe passage through the Strait of Hormuz,” the strategist noted.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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