Hormuz Uncertainty Weighs on Oil Prices
Crude oil prices are being influenced by uncertainty over oil flows through the Strait of Hormuz and tight US fuel inventories. According to MUFG's Derek Halpenny, conflicting shipping estimates and shifting diplomatic signals are keeping energy markets highly sensitive to changes in supply expectations.
President Trump recently stated that the Strait of Hormuz has been cleared of mines, but there is skepticism over whether this is true. This uncertainty has led to a decline in oil prices, which could be reversed if traffic through the Strait is higher than previously thought.
A US Energy Secretary Chris Wright claimed that the US army helped ship over 15mn barrels through Hormuz in a single day last week, with a 7-day average of more than 8mn barrels a day. However, tracking data suggests that this number may be an exaggeration, but untracked ships could still contribute to higher traffic.
The recent Iran-Oman charging Strait of Hormuz deal was viewed as evidence of defiance by Iran, which could draw a response from the US. Meanwhile, energy inventory data showed large drawdowns in distillate and gasoline stocks, with distillate inventories at their lowest level on record on a seasonal basis.