Hormuz Supply Disruptions Persist as U.S.-Iran Talks Face Uncertainty
Disruptions to oil and LNG flows through the Strait of Hormuz continue as uncertainty surrounds U.S.-Iran peace talks. The prolonged constraints are tightening global supply and increasing reliance on alternative export routes and inventories.
(Reuters) — Oil prices rose Thursday as skepticism over U.S.-Iran peace talks reinforced concerns that disruptions to energy flows through the Strait of Hormuz will persist.
The waterway, which typically carries about 20% of global oil and LNG shipments, remains constrained amid the ongoing conflict, tightening global supply. Analysts estimate roughly 13 million bpd of oil flows have been disrupted.
“We remain sceptical of any immediate solving of this war,” said John Evans, analyst at PVM. “Pick any headline and there is always a counter.”
Market reaction to diplomatic developments has been muted, with traders focused instead on continued shipping disruptions. Tanker traffic through the Strait has yet to recover despite discussions of a temporary ceasefire.
The supply squeeze is beginning to show in inventories. U.S. crude stocks fell by 913,000 barrels last week, while gasoline and distillate inventories also declined amid stronger export demand.
“As of now, there are no bombs falling, but the amount of ships making it through the Strait is no better than it was before,” said Scott Shelton of TP ICAP, pointing to ongoing pressure on global balances.
Map source: Global Energy Infrastructure