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Ships are starting to move around in the Strait of Hormuz again. Photo: Reuters . |
In trading on June 26, the price of international benchmark Brent crude oil fell 1.8%, to $72.4 per barrel, according to the Financial Times .
Notably, traders are willing to pay higher prices for year-end oil contracts. This is a clear signal that the market is experiencing a short-term oversupply.
This is the first time since the conflict in the Middle East erupted that oil prices have traded below $72.48 per barrel.
Francis Osborne, head of oil analysis at energy pricing firm Argus Media, argues that traders are pricing based on a scenario of the market returning to normal without considering the further risks ahead, which remain very real.
However, he acknowledged that oil prices were falling so sharply that he would certainly not open a buy position at this time given the massive sell-off. Tracking data from Windward showed that 31 oil tankers left the Gulf on June 24th, an increase of nearly 50% from the previous day.
Previously, the conflict in the Middle East had left more than 1 billion barrels of oil stranded within the Gulf region as producers were forced to shut down operations due to the paralysis of exports through the Strait of Hormuz.
This situation forced many countries to deplete their strategic mineral reserves. After peaking at $126 per barrel in March, oil prices plummeted as investors correctly bet that the US could not sustain such a costly economic war.
Amrita Sen, founder of the consulting firm Energy Aspects, said the world has burned through most of its stockpiles, pushing reserves to dangerously low levels. However, the market has completely ignored this fact, believing that this scarcity cannot last.
Ms. Sen revealed that some large investment funds are beginning to reduce their short positions, and she believes the new floor for crude oil prices will range from $80 to $90 per barrel. The expert predicts that oil prices will begin to rise again in about a month, after the crude oil stuck on ocean-going vessels in the Gulf is finally moved.
Paul Horsnell, an independent analyst and chairman of the Oxford Institute for Energy Studies, also pointed out that the market is reacting strongly to positive statements from the Trump administration after the US lifted all sanctions on Iranian oil within 60 days.
US Energy Secretary Chris Wright confirmed that 20 million barrels of crude oil had left the strait in the past 24 hours, equivalent to nearly one-fifth of global daily consumption, transported on 72 ships.
Nevertheless, Horsnell argued that the short-term surge in Gulf supply was unsustainable because production needed time to catch up with demand, while ships had to reroute and oil fields needed to restart.
He warned that these shipments could be creating an artificial surplus in physical markets in the short term, but that this is only a temporary effect. The expert expects supply and demand to begin balancing again by October if the peace process proceeds without incident.
Source: https://znews.vn/gia-dau-tho-tiep-tiep-giam-post1663448.html
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