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Oil prices near pre-war levels, supply risks remain
Oil prices near pre-war levels as analysts warn of supply risks amid cautious shipping in the Strait of Hormuz
Oil prices near pre-war levels as analysts warn of supply risks amid cautious shipping in the Strait of Hormuz
– Oil prices fall to near pre-war levels, but supply challenges remain despite fragile U.S.-Iran truce.
– Shipping through the Strait of Hormuz faces delays due to uncertainties, high costs, and insurance risks.
Oil market outlook
Shipping through the Strait of Hormuz is unlikely to return to pre-war levels quickly despite a recent uptick.
Nikos Petrakakos of Tufton Investment Management noted that shipping companies are hesitant to resume normal operations due to ongoing uncertainties and risks.
International benchmark Brent crude futures were priced at $72.45 per barrel on Monday, down from a wartime-high above $188.
Amrita Sen from Energy Aspects indicated that market underestimations around shipping conditions could hinder recovery.
Vessels may be moving more, but the challenge remains in convincing shippers to return to the Strait.
High shipping costs and lack of willing operators continue to impact logistics in the area.
Petrakakos said coordination with Iran around potential toll systems is inadequate due to sanctions risks.
Iran’s influence over the Strait has increased and is unlikely to revert to its previous state.
Sen highlighted that Gulf Cooperation Council nations and Western companies would reject any formal toll mechanisms proposed by Iran.
Insurance companies remain cautious, making it difficult for vessels to secure coverage for operations in the Strait.
Petrakakos added that verification of peace agreements is crucial for insurers to lower premiums.
Replenishing inventories has become a significant concern for the oil markets.
Aldo Spanjer of BNP Paribas anticipates that Iran will eventually relinquish formal control over the Strait for financial reasons.
The focus has shifted to rebuilding oil inventories as importers seek to increase stocks.
Spanjer’s year-end price target for oil sits at $80, while suggesting a stable price range of $75 to $85 by 2027.
He indicated that higher prices beyond $85 would not be sustainable due to market dynamics.
