Oil Prices Surge Past $100/bbl Amid Infrastructure Attacks and Refining Constraints

Oil prices have surged past $100 per barrel as attacks on critical Middle Eastern energy infrastructure accelerate. Brent crude oil prices remain above $100/bbl, though slightly down from recent highs, following a series of attacks during the last week. This has led to substantial drawdowns in both strategic and commercial inventories, leaving the global supply significantly tighter with minimal reserve buffers.

Concurrently, diesel prices have reached record levels due to severe global refining constraints, exacerbated by recent strikes on Russian refining facilities. The energy market is highly volatile, with near-term stability hanging in the balance of diplomatic and political developments. Energy supply forecasting remains uncertain due to these ongoing conflicts.

The tanker market has been recovering from a period of low rates as new vessel supply shrunk while oil demand remained elevated. However, recent rapid increases in freight rates have led to significant new vessel ordering, with an orderbook now standing at above-average levels. In the near term, this supply/demand misbalance is small, but it's expected to develop into a meaningful negative balance longer term, potentially leading to a downcycle.