“We're Living On An Oil Market Credit Card”: Analyst Sounds Alarm
The oil market is living on borrowed time as flows through the Strait of Hormuz remain disrupted and the cushions such as stock draws and low Asian demand are running thin, according to Saul Kavonic, Senior Research Analyst at MST Marquee. “We are living on an oil market credit card, we can’t draw stocks forever,” Kavonic told CNBC on Tuesday. Large releases from reserves and China’s very low…
Oil flows through the Strait of Hormuz are at about one-third of pre-war levels, according to Saul Kavonic, a Senior Research Analyst at MST Marquee. Kavonic warns that the oil market is "living on an oil market credit card" and that stocks and low Asian demand can no longer sustain it. With large reserve releases and China's minimal imports, the market's ability to offset lost supply is fading.
Oil flows out of the Strait are estimated at 5-7 million barrels per day, mostly through ship-to-ship transfers outside the Strait. Saudi Arabia has partially offset lost shipments by increasing flows via STS transfers outside Oman and the UAE. However, the unresolved status of Hormuz and the lack of a diplomatic solution to the current situation suggest that tensions could escalate, potentially tightening the market further before any improvement.
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