Market Concerns Over Supply, Brent Holds Near US$107
Oil prices stabilized after a sharp rally on Wednesday (May 13), when the market assessed that the Middle East conflict showed no clear resolution. Brent traded around US$107/barrel and WTI around US$102/barrel, after a nearly 4% increase in the previous session.
Supply pressures are said to be increasingly felt from Iran. Satellite imagery shows no sea tankers sighted off Kharg Island in recent days, indicating a longer lull in Iran's main export hub since hostilities began, amid the US naval blockade and tightening of security around the Strait of Hormuz.
President Donald Trump said the Iran conflict is unlikely to be a major focus of his meeting with President Xi Jinping in Beijing this week, with trade discussions taking priority. Despite Trump's claim that "Iran is very much under control," the war is still seen as adding to domestic political pressure after US data confirmed that the conflict has again triggered inflation, including gasoline prices soaring to their highest level since 2022.
Societe Generale highlighted the key risk in the timing difference between futures and physical markets: prices could react quickly to news of a "reopening," while improvements in physical supply balances come much later. The halt in oil, gas, and fuel flows also heightens concerns about global growth.
Supply chain disruptions are most pronounced in Asia. Japan, which typically relies around 90% on oil from the Middle East, is reportedly seeking alternatives, including purchasing Mexican oil for the first time since 2023. Meanwhile, Vietnam's state oil company has asked the US to allow a supertanker to bypass the blockade, deeming it crucial for its economy. Brent trading activity has also declined sharply from last week, indicating market participation is starting to wane despite prices remaining high. (asd)*
Source: Newsmaker.id
