Crude Prices Consolidate Amid Conflicting Supply Factors
Oil prices have retreated again after a rebound and are currently in a state of short-term consolidation. According to Moomoo, the market is adjusting two conflicting supply factors: the potential resumption of navigation in the Strait of Hormuz has reduced the premium for Middle East supply disruptions, while escalating tensions between Russia and Ukraine, coupled with ongoing attacks on Russian refineries and ports, have renewed concerns about global refined product and crude oil supply risks.
The recent focus has shifted partially from the Middle East to energy supplies in Eastern Europe. Russian President Vladimir Putin's remarks regarding limited progress in negotiations have heightened market concerns about further escalation. Meanwhile, Ukraine's continued attacks on Russian energy infrastructure, including refineries and ports, have impacted Russia's refining capacity. If these attacks persist, market concerns may expand beyond crude production capacity to include refining, refined product supplies, and export logistics.
A recent trend has emerged in the Strait of Hormuz, where Iran and Oman have engaged in negotiations regarding strait shipping management, making progress on temporary shipping arrangements and certain revenue-sharing issues. However, actual transportation data shows that shipping activity in the Strait of Hormuz has indeed recovered somewhat but remains significantly below normal levels.
The market is currently characterized by a significant two-way tug-of-war between hopes for the restoration of shipping in the Strait of Hormuz and continued attacks on Russian energy infrastructure. MUFG believes that the recent strengthening of crude oil prices may signal that the energy market is attempting to start a new rebound cycle, but whether this can sustain largely depends on how many vessels can safely pass through the Strait of Hormuz.