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Oil prices surge as violence flares in Strait of Hormuz

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Published05 MAY 26 - 15:25 Reading time  minutes

“The market is pricing oil higher as it factors in the risk of more oil infrastructure damage and the likelihood that the Strait of Hormuz will be shut beyond the timeline that the Trump administration has laid out.” — June Goh, Senior Oil Analyst at Sparta Commodities

  • Markets pricing in infrastructure damage risk and a longer Hormuz closure than the Trump administration is admitting
  • Only two US-flagged vessels crossed the strait after Project Freedom launched — no sign of substantial traffic resumption
  • “As more OECD inventory reports are published showing significant drawdown rates, we should see an even more bullish trend for the Brent price”

In a recent analysis for Al Jazeera, Sparta’s Senior Oil Analyst, June Goh, identifies the two forces pushing Brent higher: the growing risk of oil infrastructure damage and a Hormuz closure that is running longer than the Trump administration’s stated timeline. With only two vessels transiting after Project Freedom launched, Goh flags that OECD inventory drawdown data — not political announcements — will be the real driver of sentiment as countries dip into their strategic reserves. Brent has already risen more than 50% since the war began in late February, and a 14.5mb/d production shortfall is compounding the pressure. Traders should track OECD inventory reports closely as the clearest indicator of how quickly the supply gap is deepening.

[Read June Goh’s full market commentary in Al Jazeera]

Author

June Goh

Senior Oil Analyst

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