Oil Heats Up, US Plan Fails
Oil prices rallied again on Wednesday, extending a two-day rally that had already lifted Brent by about 12%, its biggest two-day gain since 2020, as new attacks in the Middle East made the market assess the risk of supply disruptions as increasingly real. Brent held above $82/barrel while WTI approached $75/barrel, with market participants focused on one thing: the continued recovery of energy shipping flows.
Stabilization efforts from Washington have not been enough to calm the market. President Donald Trump announced plans for insurance support and the option of escorting tankers if needed to maintain trade flows in the Strait of Hormuz. However, the market response suggests that "words" are not enough, as the cost of risk, operational readiness, and security on the ground remain questionable by shipowners and analysts.
Supply disruptions are beginning to emerge from major regional producers. Iraq, OPEC's second-largest producer, has cut production by nearly 1.5 million barrels per day and warned that the cuts could widen to more than 3 million bpd if exports remain stalled due to limited storage and malfunctioning export routes. This confirms that supply pressure is no longer just a "risk" but has entered the impact phase.
Meanwhile, the Strait of Hormuz remains a major concern. This narrow waterway carries around 20% of the world's oil and LNG, and when shipping traffic is "congested," the market automatically sets a higher risk premium. Reuters reported that shipping and production disruptions in several areas have contributed to a spike in global energy costs, increasing the potential for a domino effect on inflation and logistics costs.
Market indicators are also signaling "tightness ahead." The short-term oil price structure remains supportive of the rally, while institutions like the IEA have held emergency meetings and emphasized that member countries have more than 1 billion barrels of emergency stockpiles, but the market believes these stocks will only help if the disruptions are not prolonged. Beyond geopolitics, preliminary industry data shows US oil stockpiles rose by around 5.7 million barrels last week, a factor that could hold back gains, but for now, they are overshadowed by the supply headlines.
Oil outlook & forecast: In the near term, the oil bias remains bullish but highly volatile as long as the Strait of Hormuz remains unresolved and output cuts (particularly from Iraq) remain at risk of widening. Many analysts see Brent potentially holding its highs in the coming days; some projections place the $80–$90 range as a realistic range as long as the crisis persists, and a deeper correction is only likely to emerge if there is a real de-escalation and evidence of restored shipping flows. (asd)
Source: Newsmaker.id
