Oil Prices No Longer Follow Headlines
A month ago, a series of news reports said oil flows out of Hormuz had recovered to pre-war levels, pushing oil prices lower. However, the rout did not last. Benchmarks are set for their…
What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the…
A month ago, a series of news reports said oil flows out of Hormuz had recovered to pre-war levels, pushing oil prices lower. However, the rout did not last. Benchmarks are set for their fourth monthly gain in a row, and no amount of repeating that Gulf states are exporting even more oil than before the war can change that. Because barrels are not the whole story.
“What is the price of oil? Eight months into the war with Iran, what should be a straightforward question has become surprisingly hard to answer,” JP Morgan’s head of global commodities, Natasha Kaneva, said as quoted by the Wall Street Journal this week. The publication noted that Kaneva’s own oil price model suggests a fair value of $94 for a barrel of Brent crude.
This is only confusing on the surface. Below it, we find an abundance of risks for those shipping crude oil out of the Persian Gulf, dozens of tankers getting hit with drones or missiles in the past few weeks, and a shortage of tankers resulting from Saudi Arabia’s shift to ship-to-ship transfers off the coast of Oman to reduce the risk of having its tankers blown up in Hormuz or the Red Sea.
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