Oil News: Gulf Escalation Revives Supply Risk as LNG Disruptions Deepen
As military escalation between the U.S. and Iran continues for the second week, oil markets are signaling an increase in bullish sentiment, and supply from the Gulf of Mexico may be at more risk than it was previously. U.S. military strikes on Iranian missile launch sites on Larak Island re-ignited strikes across the Strait of Hormuz as Iran struck U.S. military bases in Jordan. President Trump claimed that Iran attacked their only large crude export terminal on Kharg Island. Reuters was unable to factually verify that report. Because of the renewed conflict, traffic through the Strait of Hormuz has declines and presents a serious risk to a historically busy trade route.
Although physical supplies are contracting, government reports out of the U.S. leave the impression that supplies remain adequate. However, Kpler estimates that the Asian crude imports in August were at 23.12 million barrels per day, a 14% decline from pre-war levels, and that crude exports through the Hormuz strait averaged 2.3 million barrels per day, a decline of 44% from July levels. Meanwhile, shipments of middle distillates to Africa from Indian refiners, and others, increased by 49% over August levels and reached a 4½ year high, showing that the war is disrupting supplies of middle distillates as well.
