The conflict in the Middle East has been going on for over 100 days – but fears of a sharp increase in oil prices to $200. per barrel were not confirmed, despite a 14% drop in global stocks of the raw material. since the beginning of hostilities on February 28, writes CNBC.
A sharp decline in Chinese crude oil imports helped curb further price increases. Market strategists say Beijing's decision to cut oil imports from 11.7 million barrels a day in February to just under 9 million barrels a day in late May helped ease the supply shock caused by the blockade of the Strait of Hormuz.
According to JP Morgan analysts, this helped keep prices at “exceptionally calm levels” after four months of conflict, notes CNBC.
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Crisis on the oil market
Commodity analysts Societe Generale, in turn, stated that 14 percent the decline in global oil supply, mainly caused by the closing of the Strait of Hormuz, resulted in an increase in prices by approximately 30%. By comparison, the 1973 OPEC oil embargo reduced supply by about 7 percent. , but resulted in a price increase of approximately 134%.
Societe Generale analysts said a number of factors – including strategic stockpile releases, reassuring signals from Washington and production increases in countries such as Brazil and Venezuela – offset the supply constraints in the Hormuz region and helped avoid a repeat of the 1973 crisis.
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But they pointed to China's “massive” import reduction of almost 3 million barrels a day and lower refining activity as a key factor in rebalancing markets.
“This is one of the largest offsets to the shock, second only to Saudi oil diversions and larger than coordinated oil releases from the U.S., Europe and Japan,” they noted.
Oil price – forecasts
Analysts are divided on the trajectory of crude oil prices.
JP Morgan economists said theirs the baseline scenario of reopening the Strait of Hormuz in June will keep the price of Brent crude at around $100. by the end of 2026 They estimated that a longer closure would raise the price by about $5. in the third quarter and $15. in the fourth quarter as oil supplies deplete faster.
Analysts from Fitch, however, estimate that reopening at the end of July would result in a “sharp decline in Brent oil prices”, to USD 70. per barrel from September. They believe the current increase reflects a “temporary logistical supply shock” rather than a permanent loss of production capacity.
Source: CNBC
