Oil: Two-sided supply risks shape price path – BNY

BNY’s Bob Savage highlights that Oil remains driven by conflicting forces, with U.S. escort plans in the Strait of Hormuz initially knocking prices lower before renewed attacks lifted them again. ECB officials warn about energy-driven supply shocks, while OPEC+ producers plan to gradually unwind voluntary cuts in 2026, stressing flexibility and market stability as Brent trades above $108 and WTI above $102.

Strait tensions and OPEC+ recalibration

"The U.S. plan to escort ships out of the Strait of Hormuz, as announced by President Trump, pushed oil down 2%. However, oil prices then bounced back up 1.5% after ships came under attack. The number of vessels passing the strait remain minimal, averaging five a day, but with only three in the last 48 hours."

"Warnings on oil prices and supply shocks from ECB speakers stand out."

"Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman have met virtually to review global oil market conditions. They agreed to implement a production adjustment of 188,000 barrels per day in June 2026, reducing the additional voluntary cuts announced in April 2023. The countries emphasized a cautious approach, retaining flexibility to adjust production levels, including reversing previous cuts from November 2023."

"They reaffirmed their commitment to market stability, full conformity with the Declaration of Cooperation and compensating for any overproduction since January 2024."

"This leaves U.S. data today again being interpreted in the context of oil prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)