Oil Prices Could Soon Rise Convulsively

The Economist: “The largest supply shock in petroleum history is getting larger fast. Some 2 billion barrels, or 5% of the world’s yearly oil supply, have already been lost because the Strait of Hormuz is shut. Every day it remains closed the deficit grows by 14 million barrels. Since peace talks between America and Iran have stalled, a reopening still seems many days away.”

“Yet oil markets look strangely calm. Brent crude futures, at $105 a barrel, have fallen from April highs of nearly $120. They remain below the peak of $129 in 2022, after Russia invaded Ukraine. Spot prices have slid even more, implying that crude oil is more plentiful than it was earlier in the war. The surprising mini-glut is real—but do not take too much comfort from it. A full-blown energy disaster may be weeks away.”