Oil Market Vulnerable to Temporary Factors, Analyst Warns
Saul Kavonic, senior analyst at MST Marquee, warns that the oil market is increasingly dependent on temporary factors. He points out that releases from oil inventories and low demand in Asia had previously offset supply losses, but these options are now narrowing.
In an assessment of the Strait of Hormuz, Kavonic notes that the volume of oil passing through the strait has dropped to around one-third of its pre-war level. Approximately 5-7 million barrels of crude oil leave the Persian Gulf every day.
Saudi Arabia has managed to offset about half of the lost supplies by increasing flows through the Strait of Hormuz and transfers near Oman and the United Arab Emirates, according to Kavonic. However, he cautions that these temporary measures cannot be sustained indefinitely.
The analyst also highlights the issue of oil inventories, pointing out that record releases have reduced strategic reserves in developed countries. The US Strategic Petroleum Reserve has fallen to its lowest crude oil inventory level since the early 1980s.