Standard Chartered has announced that oil prices are under pressure due to long and very bullish positions of investors. The bank believes that the upward trend in oil prices will only accelerate again if physical markets are affected by the war.
Fluctuations in Brent and WTI Oil Prices
On Monday, the price of Brent oil for November delivery rose by 1.70% to $106.09 per barrel. Additionally, the price of WTI crude oil changed by 0.95% to $93.29 per barrel. These fluctuations have occurred following heightened tensions between the United States and Iran and threatening speeches from officials of both countries.
Read more: Louisiana government declared a state of emergency due to diesel shortages
Long Positions in the Oil Market
According to reports from Standard Chartered, investors are currently in a maximum long position in the Brent oil, WTI, and other refined products markets. This situation has only been observed in a few instances over the past decade. However, this condition represents a serious risk for prices. If oil flow from the Strait of Hormuz returns to normal or Saudi exports increase, the likelihood of price decreases rises.
Impacts on Energy Markets
Retail diesel prices in the United States have reached over $6.50 per gallon, an increase of 83% since the beginning of the year. Additionally, gasoline prices are also close to $4.50 per gallon, which has risen by 58% since the start of the year. This increase in prices is due to disruptions in Russia's oil refining system and existing tensions in global markets.
Future Outlook for Oil Prices
Standard Chartered believes that for the upward trend in prices to continue, the market needs a real physical shock. This shock could include further infrastructure damage, a sustained decrease in oil flow from the Strait of Hormuz, or evidence that current solutions cannot maintain exports. Therefore, any escalation of tensions between Washington and Tehran could have immediate and serious impacts on the oil market.
Read more: Trump administration asked Zelensky to reduce attacks on Russian oil refineries · Brent crude and Iranian light oil rose above $106
