For the third consecutive day of international oil prices, the market focus is not just short-term fluctuations, but rather how much buffer space can be left for global crude oil supply if geo-conflicts continue to escalate. On Wednesday, at the time of trading, North Sea Brent crude oil broke 85 USD per barrel and United States WTI crude oil broke 80 USD.
The supply buffer is narrowing.
The direct driving factor in this round is the escalation of the United States-Iran strike near the Strait of Hormuz. Traders are generally of the view that the real strain on the market is not the same day ' s increase, but that once supply disruptions have expanded, the market ' s spare capacity and strategic reserves are no longer as abundant as in the past.
Jun Guo, a Sparta Comodities senior analyst, stated that in the past few months, the reserve capacity that could have been used to absorb supply shocks was approaching depletion. The report mentions that the United States has been using strategic oil reserves during the duration of the conflict to release additional supplies as the situation rises to ease price pressures.
Holmuze traffic drops.
The Strait of Hormuz is one of the most important transportation routes for crude oil worldwide, and recent shipping data have shown that risk is being transmitted. According to MarineTraffic data, there were only 57 ships passing through the Strait last weekend, about half of the week before.
Before the situation escalated in February this year, the waterway averaged about 130 large ships per day. The decline in traffic reflects the fact that shipping companies have begun to adjust to military risk arrangements and has also deepened market concerns about subsequent supply disturbances.
Market focus $100 scenario
It was also mentioned that Iran did not exclude the possibility of restricting the passage of ships in the Strait of Hormuz. At the same time, the President of the United States, Trump, has stated that, if the negotiations are not resumed, the strike against Iran could expand and potential targets could include critical infrastructure such as power plants and bridges.
As supply risks warm, some analysts believe that if the market begins to account for the more obvious risk of shortages, international oil prices may be closer to $100 per barrel. WTI has now returned to its level about a month ago, indicating that traders are reassessing the supply implications of the situation in the Middle East.
However, the United States Department of Energy denied that there was an imminent supply crisis. According to the department, with military support, 8.5 million barrels of crude oil remained in one day through the Strait of Hormuz, and the overall flow was close to normal. Even so, higher oil prices could re-inflation.