Oil Prices No Longer Follow Headlines
A month ago, a series of news reports said oil flows out of Hormuz had recovered to pre-war levels, pushing oil prices lower. However, the rout did not last. Benchmarks are set for their fourth monthly gain in a row, and no amount of repeating that Gulf states are exporting even more oil than before the war can change that. Because barrels are not the whole story. “What is the price of oil? Eight…
Oil prices have stopped following headline news, as a month-long drop did not last. Despite reports of oil flows back to pre-war levels, benchmarks are up for their fourth consecutive monthly gain. This is due to more than just barrel counts. The price of oil, even eight months into the Iran conflict, remains at over $116 per barrel, despite a fair value modelled by JP Morgan's Natasha Kaneva suggesting $94.
Risks include drone and missile attacks on tankers, and a shortage of ships, leading to soaring shipping costs. These factors, combined with the overall risk of missile strikes, make sustained oil flows unfeasible. The war premium on oil persists, but it's not the only factor. In the early weeks of the war, oil prices were optimistic, yet on the physical market, they surged.
Now, physical prices are off their highs, but they remain above $100 per barrel, driven by anticipation of further conflicts between the US, Israel, and Iran. Analysts agree that prices will likely stay high until there's a clear sign of peace.
Written by urgent.news from OilPrice's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
