Oil Reversal Lowers, Market Tests Supply Loss Amid Hormuz Crisis
Oil prices erased gains in a volatile session on Monday, as market participants assessed the next steps in the Middle East war that continues to roil global energy markets. Brent fell near US$102 per barrel, after surging more than 40% in the past two weeks, confirming continued high volatility even as the market began to refrain from further rallies.
Some operational signals came from the United Arab Emirates. Oil loading at the key port of Fujairah resumed after the second drone attack in three days, but the country's production has reportedly fallen by nearly half. Meanwhile, shipping traffic in the Strait of Hormuz has remained virtually halted since the fighting began, with only a small number of vessels attempting passage, including reports of ships turning off signals and tankers undertaking risky journeys.
On the Iranian side, the Foreign Minister said Tehran had not requested a ceasefire and had not sent any messages in that direction, adding to uncertainty about the duration of the conflict. US President Donald Trump demanded that other countries contribute to the defense of the Strait of Hormuz and said Washington was talking to Tehran, although he doubted Iran's readiness. Trump also stated that oil prices would fall sharply after the war ends, but there has been no concrete indication of a rapid de-escalation.
Market participants are now weighing whether the disruption has shifted from a shipping issue to a more tangible global supply loss, especially as regional storage capacity is said to be full and upstream shutdowns are increasing. Morgan Stanley believes the Hormuz shutdown is turning a logistical disruption into a supply loss and raised its second-quarter price forecast to US$110 per barrel. The US also reportedly attacked a military site on Kharg Island—which handles most of Iran's oil shipments—although other reports suggest exports from the island are continuing.
Efforts to increase supply through emergency reserves are underway, but the market has not yet fully calmed down. The IEA said oil from a record stockpile release will soon be available in Asia after receiving a plan to implement the 400 million barrel release. Japan began releasing reserves on Monday, while the US will begin the first tranche of its 172 million barrel commitment this week—framed as a trade-off that will eventually need to be repaid.
In recent trading, Brent for May settlement fell 1.3% to US$101.81 per barrel at 8:52 a.m. in New York, while WTI for April delivery fell 4% to US$94.70. The market will be monitoring evidence of the recovery of tanker flows in Hormuz, the impact of the attack on infrastructure and exports, and the effectiveness of distributed reserve releases in closing the increasingly questionable supply gap. (alg)
Source: Newsmaker.id
