WTI: Conflict-driven supply risks sustain price strength – DBS

DBS Group Research’s Eugene Leow notes that despite a planned release of strategic reserves and expectations of a short conflict, WTI Oil has pushed above $90 per barrel. He stresses that market confidence in restoring flows through the Strait of Hormuz remains low and that reserve releases are only a short-term band-aid to a substantial supply loss.

WTI above 90 on supply uncertainty

"Despite the announced release of 400mn barrels of oil and indications from Trump that the conflict may be short, WTI prices still pushed above 90/bbl, underscoring a lack of confidence that these measures / assurances would work."

"The oil reserves release is just a short-term band aid and is insufficient to cover an estimated 25mn barrels loss of output per day from the conflict."

"The crux of the issue still lies with whether shipping through the Strait of Hormuz can normalize."

"Even if the conflict ends quickly, there is no guarantee that the private sector would be able to resume the oil and gas flows that the world badly needs."

"A longer-term solution (a grand bargain or a more systematic way to escort ships) would probably be needed to assuage market concerns."

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