Iran Conflict Drives WTI Crude Prices Higher Amid Market Tightness
WTI Crude prices continue to rise as tensions with Iran persist. According to TD Securities' commodity strategists Ryan McKay and Bart Melek, market tightness remains in place despite some easing of deficits. The ongoing conflict has led to a preference for limited attacks over deal-making, leaving the energy market on a tightening trajectory.
The market deficit in crude has eased somewhat due to stabilization of higher dark flow volumes, but overall tightness persists. Renewed attacks and increased Chinese activity could deepen supply constraints, pushing oil prices higher. McKay and Melek warn that Chinese refining capacity would need to be tapped to alleviate pressure in the product market, which would shift some of the extreme product tightness to the crude market.
The path of least resistance remains to the upside for crude oil even as prices reach triple digits again. The strategists note that conflict-driven tightness supports current price levels and that any resolution to the Iran conflict could lead to a re-evaluation of the market's supply constraints.