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Oil market loses cushion as Strait of Hormuz risk returns
WTI traded above $90 per barrel early Monday as the Strait of Hormuz effectively closed again and tanker traffic hit multi month lows.
The global oil market is facing less protection against price spikes as renewed Middle East conflict raises supply concerns, with the latest flare up cutting into the buffers that had tempered the Iran shock earlier this year, OilPrice reports.
The outlet says prices surged early on Monday, with oil hitting around $90 per barrel as the Strait of Hormuz was essentially closed again and tanker evacuations from the Persian Gulf slowed abruptly, reflected in tanker traffic at multi month lows.
OilPrice adds that market expectations had been too complacent for weeks, centered on the idea that a U.S.-Iran memorandum of understanding would reopen the strait and allow flows to recover steadily by the end of the third quarter.
The report notes that previous measures helped cushion earlier spikes, including releases from strategic reserves and reduced demand in Asia, such as switching to coal and fuel savings, but warns prices could move higher if the renewed conflict persists for months, now that the market has drained more of the earlier shock absorbers.