Trump running out of bullets against an intractable Iran

Crude oil prices have continued their upward trend following President Trump's latest threat to Iran, coming after the first exchange of fire in weeks. As of the latest update, Brent crude was trading at $91.48 per barrel, while West Texas Intermediate stood at $86.97 per barrel, both showing an increase of more than $1 per barrel from the previous Monday.

During his remarks at the Oval Office on Monday evening, Trump reiterated the U.S.' readiness to confront Iran if needed. Shipping data reveals that tanker traffic in the Strait of Hormuz remains a fraction of pre-war levels, with Reuters citing figures that daily oil flows out of the Persian Gulf averaged 6 million barrels, with only five vessels traversing the waterway on Monday, down from the ten-day average of 14 vessels.

Analysts from ING have noted that oil producers in the region have become more comfortable shipping crude through the key chokepoint in recent weeks, with reports of 6-8 million barrels per day transiting the strait, although they assume an average of 5 million barrels. However, despite these satellite tracking firms' suggestions, the actual oil flowing through Hormuz is significantly lower, at around 6 million barrels per day, which is much less than the pre-conflict levels.

ANZ analysts have raised concerns about the global oil market's buffers becoming exhausted, with U.S. inventories nearing their minimum levels, while China's ability to maintain low imports will be tested as seasonal demand increases. The concerns extend beyond crude oil to diesel, which is already in tight supply and facing further restrictions.

Russia has extended a diesel export ban until the end of the month due to ongoing Ukrainian strikes on its refineries, and diesel fuel exports from the Middle East are also compromised by the Hormuz blockade and refinery damage throughout the region.