Brent Breaks $90, Hormuz Drives Oil Surge and Risk Premium
Oil prices rebounded on Friday (March 6th) after supply disruptions related to the Middle East war further squeezed global energy flows. Brent traded around US$88.46 per barrel (around +3.6%) after breaking through $90.23 per barrel, while WTI contracts hovered in the US$85–86 per barrel range (around +5% to +6%) in the European/US session.
The rally was fueled by shipping congestion in the Strait of Hormuz, which is considered near a "total shutdown," tightening physical supply and widening risk premiums. Reuters noted that Brent and WTI are on track for their biggest weekly surges since 2020, as the effective closure of the route is curbing exports and forcing production adjustments in the region.
Supply pressures are also emerging from storage capacity. The Wall Street Journal reported that Kuwait has begun cutting production at several fields due to limited space for pent-up crude, while Citi estimates that supply losses could reach 7–11 million barrels per day due to the Hormuz disruption.
On the policy front, Washington has signaled mitigating measures to ease price pressures, including a limited easing of purchases of Russian oil already at sea to support Asian supplies. However, the market believes this will have limited impact as long as tanker flows remain normal and the risk of attacks on infrastructure/shipping remains high.
For the macro market, the oil surge heightens the risk of energy inflation and could limit the scope for interest rate easing, especially if the disruption persists. The next variables to monitor are evidence of recovery in Hormuz traffic, the ability of producers to divert exports through alternative routes, and the rapid depletion of stocks and storage capacity in Gulf producers.
Source: Newsmaker.id
