Rabobank’s RaboResearch Global Economics & Markets team highlights rising geopolitical risks around Iran and Hormuz as Brent Oil trades close to $100. The bank notes Iranian attacks on shipping, damage to Iraqi oil facilities and questions over the Saudi Red Sea pipeline, all tightening global supply. Strategic reserve releases are seen as insufficient to offset these disruptions.

Hormuz tensions tighten global oil supply

"The focus is instead on Iran and Hormuz, as Brent oil tests towards $100 a barrel this morning. As also warned, things are going to escalate before any de-escalation on those fronts."

"That means another immediate drop in global oil supply while expanding the field of danger for oil flows far wider than Hormuz: could the Saudi Red Sea pipeline to Yanbu be targeted too, making everything exponentially worse? Meanwhile, Iran is able to get its oil out of Hormuz."

"Against this, the IEA oversaw a record release of oil reserves. However, that flow vs the lack of physical supply in Asia already looked like a plaster on a shotgun wound, to quote our energy analyst Joe DeLaura before Iraqi oil ports were taken offline, which is another cartridge fired into the same injury."

"Indeed, Bloomberg reports some refineries are turning down available oil because they are forced to pay a huge premium over ‘market’ rates; Australia’s top fuel sellers are halting spot sales on tight supply and are only dealing with regular customers; freight rates are sky-rocketing, e.g., a South Indian firm has seen quoted air-freight costs double, while containers via ship have jumped 630% and for refrigeration by 900%, with real fears of no bunker fuel ahead."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)