The crude oil market has been increasingly influenced by current news headlines in the past month.
Experts suggest that if peace negotiations between the United States and Iran do not progress, concerns about supply disruptions will intensify, further opening up potential upside for oil prices.
Oil prices continued to rise on Thursday due to the deadlock in peace negotiations between Iran and the United States, as well as both countries maintaining trade restrictions in the Strait of Hormuz.
Brent crossed the $100 per barrel mark during the previous session and continued its advance on Thursday.
“The market needs to reassess its expectations,” said Warren Patterson, head of commodities strategy at ING Economics, in a note.
Moreover, Iran’s seizure of two vessels attempting to pass through the Strait of Hormuz suggests that shipment disruptions are likely to continue.
At the time of writing, the Brent contract settled at $103.25 per barrel, up 1.3%, while West Texas Intermediate was trading at $94.25 per barrel, up 1.4%.
“Additional upside potential”
“As hopes fade, the reality of supply disruptions will become apparent, offering additional upside potential for prices,” added Patterson.
Patterson believes that the market will increasingly ignore recent noise and headlines driving price movements, unless significant progress is made in peace negotiations.
Despite a ceasefire extension by U.S. President Donald Trump – following a request from Pakistani mediators – Iran and the United States continue to restrict ship transit in the Strait of Hormuz.
This crucial corridor previously accounted for about 20% of global daily oil supply before the war began on February 28.
The recent weeks have seen a sharp decline in jet fuel stocks in the ARA region, now at their lowest level since the COVID-19 pandemic.
The soaring price of jet fuel – nearly $1,800 per ton in early April – reflects this trend, with prices more than doubling since the start of the Iran war.
“Increasing U.S. exports”
As global buyers seek alternative sources, the United States is exporting historically high volumes of oil and refined products, according to the latest Energy Information Administration data.
Total oil and refined product exports increased by 137,000 barrels per day in the most recent week, reaching a total of 12.88 million bpd.
Refined product flows have been the main driver of the recent export increase, rising by 564,000 bpd from week to week.
This growth pushed total exports above 8 million bpd for the first time.
“While the U.S. market has been relatively shielded from supply disruptions in the Middle East, prolonged instability tightens conditions as global buyers increasingly turn to American supplies,” said Patterson of ING.
Despite a 1.93 million barrel increase in U.S. commercial crude oil stocks last week, total crude oil stocks fell by 2.21 million barrels once Strategic Petroleum Reserve (SPR) releases were taken into account.
Furthermore, stronger exports of refined products led to a decrease in stocks, with gasoline and diesel stocks dropping by 4.57 million barrels and 3.43 million barrels, respectively.
