Oil doesn't trust Trump

XTI/USD

Key zone: 80.00 - 83.50

Buy: 85.00 (on strong positive fundamentals); target 87.50-90.00; StopLoss 84.30

Sell: 78.50 (after retesting 86.50); target 75.00; StopLoss 79.20

Disruptions to logistics through the Strait of Hormuz continue to put pressure on the global economy. Interruptions in the supply of oil, gas, and other commodities are keeping prices significantly above the levels seen before the conflict began. Against this backdrop, the very concept of strategic reserves is gradually changing its meaning: instead of being a long-term energy security tool, they are increasingly becoming an emergency resource for rapid crisis response.

The U.S. Strategic Petroleum Reserve (SPR) declined by another 8.9 million barrels, bringing total reserves down to 340.3 million barrels. This was the third-largest decrease in history. The current drawdown is part of the 172-million-barrel release program announced by the Trump administration back in March.

The release of reserves was coordinated with several other countries less than two weeks after the joint U.S.-Israeli strikes on Iranian territory.

Reminder

The reduction of U.S. reserves is taking place amid a temporary agreement between the United States and Iran to resume shipping through the Strait of Hormuz and efforts to end the 15-week military confrontation. On June 15, the parties announced an interim arrangement, while the signing of a comprehensive agreement is tentatively expected on June 19.

However, market participants remain cautious.

• The energy and shipping sectors reacted to the news with moderate optimism, as key issues remain unresolved. Specific timelines for the full reopening of the strait have not yet been determined, nor have the rules governing vessel traffic. At the same time, the Strait of Hormuz is critically important not only for oil and gas but also for shipments of aluminum, fertilizers, and even helium, which is widely used in semiconductor production.
• The conflict has once again demonstrated the vulnerability of global trade. The global supply system has proven excessively dependent on a single transportation route. Rising security threats have led many shipowners to avoid passing through the region.
• According to available information, the U.S. military organized dozens of covert ship-to-ship oil transfer operations to temporarily sustain energy exports from the Persian Gulf. Drones, underwater drones, and helicopters were used to escort convoys.
• Within the United States, the use of the SPR does not yet appear to be a convincing tool for containing fuel prices. The Trump administration explains its actions through a swap mechanism under which energy companies effectively receive oil “on loan” and are later required to return it with an additional premium.
• The return premium has already reached approximately 26%. According to estimates from the Department of Energy, this mechanism has saved American taxpayers more than $3 billion.

At the same time, authorities plan to replenish reserve volumes over the next year by approximately 20% more than the volume already utilized. However, an open question remains: at what price will the oil have to be repurchased, and what will the ultimate cost of such a reserve-management strategy be?

And what is the result?

Despite the loud statements, neither Washington nor Tehran has yet provided a concrete mechanism for implementing the agreements. Moreover, Iran separately emphasized that the agreement will not take effect until it is officially signed.

Even if the deal announced by Trump is ultimately finalized, this does not mean a rapid return of the market to its pre-war operating conditions. Shipping companies need guarantees that vessels will not only be able to enter the Persian Gulf safely but also leave it without new delays, restrictions, or additional transit fees.

An additional risk factor remains the accumulated queue of vessels. More than 600 ships are already waiting for passage, and a full normalization of logistics could take weeks.

Since the beginning of the current week, prices for both major oil benchmarks have fallen by approximately 5%, but a significant increase in market selling volumes has not yet been observed. This suggests that investors are not ready to price in a sustained improvement in the situation.

The market continues to operate under conditions of high uncertainty, while diplomatic statements remain unsupported by real changes in energy logistics. Until the Strait of Hormuz is fully restored to operation, the geopolitical premium in oil prices will remain, and U.S. strategic reserves will continue to serve as a tool for stabilizing the domestic market.

So we act wisely and avoid unnecessary risks.

Profits to y’all!