"The primary driver stems from Iran's first direct attacks on oil and gas production facilities in the UAE and Iraq, including the Shah gas field and the Majnoon oilfield. This development marks a critical shift, as supply risks are no longer merely anticipated but have materialised into actual disruptions, forcing the market to reprice the global supply-demand balance in the short term."
"At the same time, the Strait of Hormuz remains a critical bottleneck for global energy markets. This corridor accounts for roughly 20% of global oil supply, and any disruption in this region can trigger widespread ripple effects across the entire supply chain. Some estimates suggest that global supply losses could reach around 8 million barrels per day, equivalent to nearly 8% of global demand."
"From my perspective, the market is no longer simply pricing geopolitical risk, but rather pricing actual supply disruption. This distinction is crucial, as real supply losses tend to trigger stronger and more sustained price reactions compared to periods dominated by perceived risk alone. This also suggests that the current upward momentum in oil prices may not yet be exhausted."
Oil markets are experiencing significant price elevation driven by escalating Middle East tensions and actual supply disruptions. Iran's direct attacks on oil and gas facilities in the UAE and Iraq have caused tangible production losses, with UAE output dropping up to 50% and port exports disrupted. The Strait of Hormuz, handling approximately 20% of global oil supply, remains vulnerable to further disruptions. Global supply losses could reach 8 million barrels per day, representing 8% of global demand. The critical distinction is that markets now price actual supply disruption rather than anticipated geopolitical risk, typically triggering stronger and more sustained price reactions. This shift suggests current upward price momentum may continue.
Read at London Business News | Londonlovesbusiness.com
Unable to calculate read time
Collection
[
|
...
]