Oil markets ‘far’ from normal even as some Strait of Hormuz issues ease: TD
The TD Bank report warns of the risk of further disruptions in the oil market supply chain 'remains materially higher than before the war.'
Oil markets are "far from normal," according to TD Bank, despite progress in unblocking the Strait of Hormuz. TD economist Marc Ercolao stated that oil prices are still "high" and that the market remains "uncertain." While more crude oil is moving through the contested waterway, it is doing so "through more complex and less transparent routes," leading to higher freight costs and insurance expenses.
Diesel is currently the tightest part of the barrel, impacting a wide range of industries from trucking to industrial activity. The G7 recently agreed to release 100 million barrels of reserve crude oil and diesel, but TD Bank says this "is not enough to reset the market." Average gas prices in Canada are $1.76 per litre, which is below last month's high of $1.83 and the May highs of $1.90, but still significantly higher than a year ago.
The International Energy Agency predicts a significant drop in global oil demand due to the Iran war, and diesel is expected to account for 25% of the decrease.
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