Oil Holds Higher, Trump Claims Iran Blockade Effective
Oil prices held steady on weekly gains after a sharp rally over the past two weeks, as US President Donald Trump said the blockade on Iran was “working.” In two weeks, oil has surged more than 25% as stalled negotiations extended the near-total closure of the strategic sea lane that, before the war, carried about a fifth of the world’s oil supply.
Supply concerns have driven high volatility and altered the structure of the futures market, including a flattering futures curve as market participants try to assess the severity of the future supply deficit. Amid these conditions, price corrections tend to be quickly bought back as supply uncertainty persists.
ConocoPhillips warned of the potential for “critical shortages” for some importing countries as the war enters its third month. CFO Andy O’Brien said supply pressures are likely to worsen significantly starting in June, especially as the “grace period” for tankers that exited the Persian Gulf in late February expires after their cargoes arrive at their destinations.
O’Brien added that import-dependent countries are at risk of facing supply shortages in the June-July period. This means that risks are no longer solely reflected in paper prices (paper market), but are beginning to shift towards physical market availability issues.
Indications of this physical tightening are evident in the narrowing gap between paper and physical prices, while US crude oil exports surged to a record high last week as global buyers sought to replace lost barrels from the Middle East. In Asia this morning, July Brent rose 0.9% to US$111.36 per barrel and June WTI rose 0.5% to US$105.61; the market is now monitoring the smooth flow of tankers, signs of shortages in importing countries, and the continued impact of the energy surge on inflation and interest rate policy. (asd)*
Source: Newsmaker.id
