Oil Markets Underestimate Supply Risks, Warns Mirae Asset

Mirae Asset has sounded a warning about oil markets, stating that they are not fully accounting for risks such as Strait of Hormuz disruptions and ongoing conflict-related refinery damage. The global strategic reserves are at low levels, which could lead to increased price volatility.

The Strait of Hormuz remains a critical bottleneck for global oil transit, with millions of barrels of crude relying on this maritime route daily. Ongoing regional instability continues to threaten these physical flows, creating a risk that the market is currently underestimating.

The ongoing Russia-Ukraine war has directly affected global oil supply by targeting key processing infrastructure. Repeated drone attacks on Russian refineries have forced a reduction in crude processing capacity, pushing Russian oil production to a 2.5-year low.

The significant reduction in strategic petroleum reserves is also a major factor increasing the risk of volatility. Between March and June, OECD nations drew down approximately 700 million barrels of oil from these emergency buffers.