Oil prices surged again, driven by the lack of progress between the United States and Iran and fears that energy flows from the Persian Gulf will remain restricted longer than anticipated.
The oil market has moved past the optimism of a rapid reopening of the Strait of Hormuz and now operates under a more strained scenario: reduced available supply, inventories under pressure, and demand beginning to ease, though not yet enough to balance the deficit.
Oil prices exceed $122
According to market data, ICE Brent traded above $122 per barrel, its highest level since the start of the war with Iran. The international crude benchmark remains pressured by the failure of talks between Washington and Tehran, as well as the US rejection of Iran’s proposal to reopen the maritime passage.
Thus, traders have begun to price in a more prolonged disruption in the Persian Gulf. The area concentrates key routes for crude oil and liquefied natural gas transport, so any blockade in the Strait of Hormuz immediately alters global energy supply expectations.
Demand destruction does not offset the deficit
According to estimates cited by commodity analysts, the rise in crude oil prices has already led to demand destruction of approximately 1.6 million barrels per day. Although this figure is considerable, it remains below the magnitude of the supply shock facing the market.
In this context, the adjustment may become more aggressive. If the disruption persists, consumer economies will increasingly rely less on available inventories, and the market will require an additional reduction in consumption. This process typically occurs through a familiar route: higher oil prices.
Furthermore, the pressure is not limited to Brent crude. WTI has also received upward support, as international buyers seek alternatives outside the Persian Gulf to cover immediate supply needs.
United States absorbs more international demand
Energy Information Administration data shows that buyers have increasingly turned to the United States as an alternative source. US crude exports increased by 1.64 million barrels per day in one week, reaching a record high of 6.44 million barrels per day.
At the same time, total exports of oil and refined products reached 14.18 million barrels per day, completing five consecutive weeks of record volumes. This movement helps cover part of external demand but also tightens the US domestic market.
Consequently, commercial crude inventories in the United States fell by 6.23 million barrels during the week. Including strategic reserve releases, the total reduction reached 13.36 million barrels, a clear sign that the system is using safety buffers to cushion the impact.
European gas reacts with more caution
While oil prices are factoring in a scenario of persistent scarcity, the European gas market has reacted more moderately. The TTF remains below 50 euros per megawatt-hour, although prices have risen in recent days due to concerns about LNG shipments.
Likewise, low seasonal demand offers some relief to Europe. However, if supply disruptions persist, the process of filling reserves before the winter of 2026/27 could become complicated. Currently, the European Union’s gas reserves are slightly above 32% of their capacity.
The market also observes competition with Asia, where JKM trades at a premium to TTF. This difference may attract LNG cargoes to Asian buyers and limit Europe’s ability to replenish inventories quickly.
The market enters a more defensive phase
The energy crisis linked to the conflict between the United States and Iran is forcing operators to revise their assumptions. The effective closure of the Strait of Hormuz, falling inventories, and growing US exports show a market attempting to adapt without an immediate diplomatic solution.
For now, the dominant signal is clear: as long as there is no progress in restoring flows from the Persian Gulf, oil prices will remain exposed to further increases. The balance will depend on three variables: duration of the disruption, alternative supply capacity, and the speed at which global demand reduces consumption.
Source: ING
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