Oil News: Crude Futures Sink, but Hormuz and Red Sea Risks Hold
Key Points:
- Fewer than 10 vessels per day passed Hormuz, leaving normal flows of crude, condensate and products far from restored.
- Brent fell 8% to $89 as the Iran pause triggered profit-taking, but tanker traffic through Hormuz remains severely depressed.
- Around 10 million barrels per day of Middle East crude and products still require workarounds, inventories and rerouted cargoes.
Oil fell hard Monday after the White House paused attacks on Iran to give diplomacy more time. The market treated it as a reason to lock in gains after Brent’s run from the low-$70s to above $100 in three weeks. That part makes sense. The part that does not make sense is treating a pause in strikes as a fix for the shipping problem that drove the rally. Fewer than 10 commodity vessels per day moved through the Strait of Hormuz over the weekend. Saudi Arabia’s Red Sea alternative is under Houthi fire. Kazakhstan lost more than half its daily oil production after drone attacks hit its Black Sea export terminal. The barrels that were missing last week are still missing Monday. The only thing that changed is the shooting stopped for a few days.