00:00This market quite trigger happy, right? We saw a massive reversal and now we're reverting to where we were earlier
00:06this morning. Why?
00:08Every headline is moving the market and I think that's because it's such a binary position in some ways for
00:17oil traders.
00:18On the one hand, as Jumana says, the Straits of Hormuz remains all but closed.
00:23And we saw today a ship actually in the northern Persian Gulf got attacked and damaged.
00:29And so that highlights the dangers for shipping in the region and that is preventing oil coming from the region.
00:35But on the other hand, traders are extremely sensitive to any headline that suggests that there might be some sort
00:40of rapprochement or talks between the US, Iran and Israel.
00:45And there was a headline that highlighted an interview with a deputy Iranian foreign minister.
00:50That actually happened yesterday, but traders are so sensitive that they sold off a little bit on that.
00:56So traders are really positioned here for all outcomes and that makes them incredibly sensitive to anything that crosses the
01:03wire.
01:03Now, that said, Will, we are still at levels that we were already at basically a few times this period.
01:09So we haven't topped 85, for example, on Brent. What would be the catalyst that would send us above that?
01:14Do we need storage numbers? Do we need supply numbers?
01:17I think the longer that this goes on and that we see the impacts of the effective closure of Hormuz
01:24continue, prices will gradually ratchet higher.
01:28And that's because it will prevent oil getting to oil refineries outside the Persian Gulf.
01:32And it will prevent fuel being produced at refineries inside the Persian Gulf getting to their markets.
01:39And we saw today that China itself is not exporting any fuel now because it's worried about the supply of
01:46fuels globally.
01:46And that shows that it is reverberating. So the longer this goes on, you probably will see some ratcheting.
01:51But you make a good point about the context. Historically, oil prices are high, but they're not that high.
01:57We saw them go well above 100 at the start of the Ukraine war. We've seen them trade at 100
02:01many times over the last 10 years.
02:03So they're high, perhaps going higher, but they're not extreme yet.
Comments