Oil: Prices supported by supply risks and Iran tensions – Danske Bank

Danske Research Team underscores that European diesel prices skyrocketed after IEA members accelerated previously declared oil stock releases, with a focus on diesel due to tight markets and Iran-related obstructions. Strait of Hormuz crude deliveries plummeted following tanker assaults, although alternate paths partially mitigated the drop.

The research team also observes the oil price surpassing $102 as the US ponders strike measures against Iran. In commodities, European diesel prices skyrocketed sharply after IEA members approved the early release of oil stocks announced in March, although the plan remained within the 400m barrels already pledged. Approximately 100m barrels still needed to enter the market, with members intending to prioritize diesel whenever possible due to tight markets and supply disturbances from the Iran conflict.

This measure thus primarily releases previously committed volumes rather than introducing new supply, which displeased markets. Additionally, Strait of Hormuz traffic plummeted to its lowest level in over two months, with Kpler reporting only seven commodity vessels passing through on Tuesday following last week's highest level of tanker attacks since the Iran war commenced.

Crude flows through the Strait were 27% below the wartime peak the week prior. Nonetheless, increased exports from the Gulf of Oman and Red Sea are counterbalancing the decline, sustaining overall regional crude exports.