Brent: Covert tanker flows may ease supply pressure - Commerzbank

Commerzbank’s FX Research team, including Charlie Lay and Dr. Henry Hao, highlight that Brent crude has surged on Strait of Hormuz hostilities but see scope for gradual de-escalation in coming months. They argue covert tanker transits should allow Gulf oil shipments to recover, while petroleum products and natural gas face a more prolonged supply squeeze and less favorable outlook.

Covert flows temper supply shock

"The price of Brent crude oil has risen sharply as a result of the recent hostilities in the Strait of Hormuz. This makes a formal agreement between the fighting parties even less likely than before. But even without a diplomatic solution, a gradual de-escalation is likely to begin in the coming months, and thanks to tankers’ covert transits through the strait, oil shipments from the Gulf region should gradually recover."

"The outlook for petroleum products and natural gas is less favorable. Here, disruptions to transportation and production are likely to continue to limit supply for some time to come."

"For early Asian trading, the key variable will again be oil. Friday's Wall Street rebound reflected relief as Brent retreated from USD110. However, the subsequent Saudi pipeline shutdown, Houthi capture of Perim Island, and postponement of the Hormuz talks have renewed supply concerns."

"Brent crude oil prices fell 2.8% to USD104.61 last Friday but still gained 8.7% last week. This was on top of the near 8% gain the previous week, leaving Brent up 17% over the past two weeks."

"In Asia, the Middle East energy shock remains the dominant external risk. Net oil importers face a renewed deterioration in their terms of trade, while higher fuel prices threaten to complicate the inflation outlook and constrain monetary-policy easing across the region."

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