OIL PRICES RISE AGAIN

U.S. oil hovers near $100​


U.S. crude oil prices rose more than 3% Tuesday on reports that Donald Trump is dissatisfied with Iran’s proposal to reopen the Strait of Hormuz.

Investors also kept an eye on OPEC after the United Arab Emirates said it was leaving the organization starting Friday.

West Texas Intermediate futures jumped more than 3% to $99.75 per barrel by 11:34 a.m. ET.

International benchmark Brent futures advanced about 3% to $111.49.

Trump told his advisors that he is not satisfied with Iran’s proposal to open the strait and end the war.

Even if hostilities ended immediately, a return to normal market conditions would take months, Lipow said, citing the need to clear mines, ease tanker congestion and gradually restart production and refining.

Factoring in shipping and distribution lags, he estimated it would take at least four to six months for oil markets to stabilize, with prices likely to remain elevated in the interim as inventories approach critical levels.

“The longer the conflict goes on, the higher the price, especially as inventories are drawn down to critical operating levels. If the conflict ended tomorrow, crude oil prices are estimated to drop $10 per barrel,” he added.

Absent any new negotiations, the WTI crude oil price will drift back up to $100, with the Brent Crude going over $110, Lipow said.
 
The people are onto the impact of Trump's war. The station was packed today with people loading up before the next price rise. A big jump is supposed to be coming in the next few days. Today's pump price was a jump from yesterday's.
 

Evening digest: US blockade, oil surge shake markets​



Oil prices spiked above $100 per barrel amid concerns over supply disruptions linked to the US blockade of the Strait of Hormuz, a critical route that handles roughly 20% of global oil and liquefied natural gas flows.

Prices later eased slightly, with Brent crude at $98.41 per barrel, up 3.4%, and WTI at $97.99, up 1.4%. Physical crude in Europe traded even higher, with some grades reaching around $150 per barrel.

However, gains were tempered after the Organization of the Petroleum Exporting Countries lowered its second-quarter demand forecast by 500,000 barrels per day, highlighting uncertainty in the demand outlook.
 
A new oil reality starts to dawn


As the Iran war drags on, it's increasingly clear that there is likely no going back for the energy market.

Why it matters: Oil and gas prices will be higher for longer than investors expected, and the market dynamics are shifting — as countries and companies look for alternative sources of energy or oil and for new ways to move it around Trump's blockade line.

The big picture: Wall Street doesn't seem to care that the biggest energy shock in decades is permanently altering the underpinnings of the biggest and most important commodity market on the planet.
  • Although there have been some signs this week that analysts are waking up to the new reality, stocks are still at record high levels.
  • There are reasons that this makes more sense than it would at first seem, as we explain below.
Between the lines: The war is catalyzing all kinds of changes because players realize that they can no longer depend on free movement through the critical Strait of Hormuz and that prices will be higher for longer as a result.
  • That gives everyone more incentives to drill, open up new pipelines, ink energy deals, etc.
Case in point: A sustained oil price of $100 a barrel could unlock up to 2 million more barrels per day of crude from South American countries, a recent analysis from Rystad found.
  • "Trump's war on Iran has done more than spike oil prices — it has exposed how dangerously concentrated global supply chains are around the Strait of Hormuz," the analysts wrote.
State of play: The United Arab Emirates said Tuesday that it is pulling out of OPEC, the Organization of the Petroleum Exporting Countries.
  • The UAE's departure is the clearest sign yet of how the Trump's war is permanently shifting dynamics in the market.
Follow the money: Shell just announced its largest deal in over a decade to acquire Canadian oil and gas producer Arc Resources.
  • Gulf states are looking for new pipelines to get around Trump's naval blockade.
The intrigue: There is an expectation that oil prices will go even higher and oil stocks are hitting new highs!
  • Citi analysts explain why: Before Trump initiated the war, oil inventories were high and the release of reserves from the International Energy Agency's member states helped smooth out the shock.
What to watch: Wall Street analysts are coming to the realization that higher prices stemming from Trump's war are going to be long-lasting.
  • Citi raised its forecast this week. Goldman Sachs did, too, predicting the average price of a barrel of Brent crude, the global benchmark, would average $110 a barrel in the fourth quarter.
  • The forecast is now nearly $30 higher than it was before Trump started the war.
  • Those numbers are their base case, which now assumes that the War Powers Resolution will force Trump to reopen the Strait of Hormuz at the end of June. If the reopening is at end of July, they predict $120 oil. And in the worst-case scenario, if the strait never fully gets back to normal, oil remains hyper-elevated.
 
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