Oil Prices Decline Amid Easing Tensions and Improved Supply
Oil prices declined despite ongoing US, Iran tensions as supply disruptions in the Persian Gulf appear to be easing. According to ING Think, tanker crossings through the Strait of Hormuz have increased slightly, and around 13m b/d of oil is coming out of the region, with roughly half flowing through the strait and the other half using pipelines.
The US energy secretary stated that around 65% of pre-war levels are being reached in terms of oil flows from the region. However, this does not necessarily translate to a significant improvement in global supply due to operational minimum levels in the US Strategic Petroleum Reserve (SPR).
ING Think notes that while the SPR currently stands at around 308m barrels, its buffer is significantly less than what the headline number states. The energy reserve's operational minimum level has been estimated to be as high as 180-200 m barrels, which would leave little room for further releases.