Hormuz Traffic Surge Fails to Ease Oil Price Hopes

A surge in ship traffic through the Strait of Hormuz has raised hopes that oil prices may drop, but analysts warn that this is not as straightforward as it seems.

According to data from UK Maritime Trade Operations (UKMTO), traffic through the strait jumped almost 400% in two weeks, from 39 full transits on August 7 to 192 on August 21. This has led some to believe that supply fears are easing and oil prices will decline.

However, as analysts point out, this increase is largely due to ships turning their transponders back on after switching them off in the war zone, rather than an actual increase in cargo. In fact, the amount of barrels being transported through the strait remains well below pre-war levels, at around 90% lower.

Refined fuel, on the other hand, is tighter still, with the US diesel crack spread reaching an all-time high of $102.20 on August 17. This has been driving up crude prices, which rose about 5% across the week.