Oil Prices Set for Largest Quarterly Drop Since Pandemic as Hormuz Flows Recover
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IN SHORT
Oil prices are on track for their largest quarterly drop since the COVID-19 pandemic, influenced by easing Middle East tensions and a rebound in tanker traffic through the Strait of Hormuz. Clean tanker owners are showing increased willingness to transit the Strait, suggesting a reduced need for expensive ship-to-ship transfers. Despite this optimism, oil prices indicate that geopolitical risks have not entirely dissipated, as tanker traffic remains below pre-conflict levels. In a separate development, QatarEnergy has raised its July Qatar Sulphur Price (QSP) by $85/t to $890/t fob Ras Laffan/Mesaieed.
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Key Numbers
$85/tQatar Sulphur Price increase
$890/tJuly Qatar Sulphur Price fob
$1,015-1,030/tcfrimplied delivered cost to Chinese ports
Who's Involved
QatarEnergy Marketing
company that increased July Qatar Sulphur Price
Clean tanker owners
industry group willing to transit Strait of Hormuz
Asian refiners
entities redirecting Middle East crude to the U.S.
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Key facts
Oil prices are set for their largest quarterly drop since the COVID-19 pandemic.
Easing Middle East tensions are contributing to the price drop.
Tanker traffic through the Strait of Hormuz is recovering.
Asian refiners are redirecting Middle East crude to the U.S.
Clean tanker owners are increasingly willing to transit the Strait of Hormuz.
Reduced reliance on costly ship-to-ship transfers is anticipated.
Oil prices reflect optimism that geopolitical risks have not fully subsided.
Tanker traffic remains below pre-conflict levels.
QatarEnergy Marketing has increased its July Qatar Sulphur Price (QSP).
The July QSP is $85/t higher, reaching $890/t fob Ras Laffan/Mesaieed.
Delivered cost to Chinese ports is implied to be $1,015-1,030/tcfr.
Oil prices are experiencing their largest quarterly decline since the COVID-19 pandemic, a trend attributed to a decrease in Middle East tensions and a recovery in tanker traffic through the Strait of Hormuz. This easing of geopolitical concerns has led to Asian refiners redirecting Middle East crude to the U.S. as supply increases.
Clean tanker owners are demonstrating a growing readiness to transit the Strait of Hormuz, a sign that they are less reliant on costly ship-to-ship transfers. However, the current oil prices suggest that the market perceives geopolitical risks as not having fully subsided. Tanker traffic volumes are still reported to be below pre-conflict levels, indicating a cautious approach.
In a related market development, QatarEnergy Marketing has announced an increase in its July Qatar Sulphur Price (QSP). The price has been raised by $85 per tonne, bringing it to $890 per tonne fob Ras Laffan/Mesaieed. Freight rates to Chinese ports suggest that the delivered cost for this sulphur will range between $1,015 and $1,030 per tonne cfr.
↳ Why This Matters
Oil prices are experiencing their largest quarterly decline since the COVID-19 pandemic, a trend attributed to a decrease in Middle East tensions and a recovery in tanker traffic through the Strait of Hormuz. This easing of geopolitical concerns has led to Asian refiners redirecting Middle East crude to the U.S. as supply increases.
Frequently asked questions
The Strait of Hormuz is a vital chokepoint for global energy supplies, connecting the Persian Gulf to the open ocean. Approximately 14 million barrels of oil are transported through it.
Asian refiners have secured sufficient crude for the next two months from non-Middle Eastern sources and are seeing increased supply from the Middle East as the Strait of Hormuz reopens, making Middle Eastern grades more competitive.
The Namu was hit near the stern in an attack in May, likely involving an Iranian anti-ship missile according to South Korea, though Iran denied involvement. It is undergoing repairs and expected to exit the Strait of Hormuz in mid-July.
What Happens Next
01Monitor developments regarding the Strait of Hormuz's openness.
02Observe U.S. inventory levels at Cushing and the SPR.
03Track future crude oil purchase decisions by Asian refiners.
04Track repairs and exit of the vessel Namu from the Strait of Hormuz.
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