Hormuz Crisis Prolongs Oil Supply Disruption
The conflict between the US and Iran has led to a prolonged disruption of oil supplies through the Strait of Hormuz, causing traders to reassess their expectations.
Nearly six months into the war, hopes for a diplomatic breakthrough have faded, with both sides digging in. The 60-day negotiating period expired on August 17, and neither Washington nor Tehran appears willing to compromise over the future of the Strait of Hormuz.
The result is an unusual situation where traders know supplies have been disrupted but cannot determine by how much. The UAE has reportedly built a network of 'dark tankers' that shuttle crude through Hormuz before transferring cargoes in the Gulf of Oman, making it difficult to track actual exports.
Russian facilities in Ukraine were damaged from drone attacks, and US fuel exports have surged as American refineries run at record utilisation rates. However, seasonal maintenance ahead of winter and hurricane season threaten to curb operations along the US Gulf Coast, hampering efforts to rebuild depleted fuel inventories and sustaining high product prices.