Amritasan, founder and market information director at Energy Aspects, stated that future crude oil prices are disconnected from the realities in the Middle East and should be closer to $150 per barrel. In an interview on Friday, he analyzed the market situation and pointed out its indifference to the severity of conflicts in the region.
Oil Market Analysis in Critical Conditions
He noted that the market is largely indifferent to the intensity of conflicts in the Middle East, particularly ignoring the attacks by Iranian-backed Houthis on Saudi Arabia's energy infrastructure and other facilities. He added, "Future prices can hardly reflect the fundamental realities, part of this issue relates to the U.S. midterm elections and the fact that the U.S. government hopes to lower prices."
He also pointed out that the market is significantly ignoring real events on the ground, infrastructure damage, and transportation disruptions, which exacerbates the oil transportation crisis. Currently, a large fleet of oil tankers is conducting ship-to-ship transfers outside the Strait of Hormuz, leading to the highest global shipping rates and reduced access to vessels for other routes.
Logistical Challenges in Oil Transportation
Russell Hardy, CEO of the world's largest independent oil trader, Vitol, announced at the energy summit in London that the transportation system through the Strait of Hormuz is "very inefficient." He added, "We now have more crude oil from the Middle East, but this has turned into a transportation crisis." Hardy also noted that "there really aren't enough ships to move the oil."
On Friday, crude oil futures fell in Asian trading; however, Brent crude remained above $100 per barrel and was on track for a weekly gain due to the increased number of attacks on tankers in the Strait of Hormuz. This rise in attacks poses a threat to the ongoing improvement in oil supply in the Middle East.
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