PVM Oil Associates analysts have predicted that Brent oil prices may rise again to $120 per barrel, as supply disruptions in the Middle East, declining inventories, and widespread restrictions in refining activities have tightened the space for price increases.
Disruptions in the Strait of Hormuz and Their Impacts
John Owens, a PVM analyst, stated that the likelihood of Brent oil prices reaching $120 has become a serious discussion. He noted that the strategies previously effective in mitigating the impacts of traffic disruptions in the Strait of Hormuz have now lost their effectiveness.
Read more: Ghalibaf's Confrontation with Foreign Influence: Legal Challenges in Iran
Initially, disruptions in the Strait of Hormuz were managed using alternative maritime routes and coordinated releases of strategic oil reserves. However, Owens emphasized that these options are now becoming limited, and geopolitical disruptions have spread to other parts of the oil supply chain.
Transportation Impacts and Refining Restrictions
The East-to-West pipeline in Saudi Arabia, which provided a vital alternative route, has been temporarily shut down due to repeated Houthi attacks. This situation has also affected transportation through the Bab al-Mandab Strait.
Tamas Varga, another PVM analyst, also pointed out that with dwindling hopes for a diplomatic agreement regarding the Strait of Hormuz, the current situation has become more challenging. He said, "In the absence of any progress, prices will be constrained downward, and the oil inventories that the International Energy Agency (IEA) has predicted will deplete faster than expected will not be replenished soon."
Refining restrictions have also put additional pressure on the market. Owens referred to disruptions in Russian refining capacity, high utilization rates in the United States and India, and limited refining activities around the Persian Gulf. These conditions have led to a tightening of the market for ready-to-use fuels, especially diesel.
Overall, PVM analysts believe that with ongoing geopolitical disruptions, there are fewer mechanisms to alleviate pressure on the market. The failure to resolve conflicts affecting oil flows may lead to sustained high oil prices.
Read more: Houthi Assault on a New Island; Iran's War Enters a New Phase · Increase in Transportation Costs for Russian Crude Oil Exports from the Black Sea to Record Highs
