Oil is no longer waiting for peace

XBR/USD

Key zone: 88.00 - 91.50

Buy: 91.50 (on a decisive break above 90.00); target 93.50-95.00; StopLoss 90.80

Sell: 87.50 (on strong negative fundamentals); target 85.00-83.50; StopLoss 88.20

The market has stopped waiting for a quick return to normal and is learning to live with a shortage. Six months of conflict, a failed ceasefire, and the lack of a compromise over the Strait of Hormuz are turning supply disruptions from a temporary shock into a structural pricing factor.

A reminder:

Another attack on a cargo vessel today served as yet another reminder: the key route for oil and gas supplies remains a zone of military risk. The panic premium has gradually faded from prices, but oil is still roughly 50% more expensive than at the beginning of the year and is trading around $90 per barrel.

• The market is no longer pricing in a scenario in which oil supplies suddenly disappear. But it is not expecting a return to the old logistics system either. And this new reality now comes at a price.
• For Tehran, the cost of the conflict keeps rising. In July, inflation in Iran exceeded 80% year over year. Oil exports fell to 294,000 barrels per day from 1.7 million bpd in 2025. Iran has to search for alternative routes and supply arrangements, while buyers demand a premium for the additional risks.
• For Washington, the situation is also becoming politically toxic. The price of diesel fuel exceeded $100 for the first time, and Trump has already warned Americans to prepare for high fuel prices. The problem is that this directly contradicts his campaign promise to reduce energy costs. The average gasoline price has reached $4.06 per gallon — 29% higher than a year ago.
• The global market is losing millions of barrels of refining capacity: U.S. refineries are trying to capitalize on high margins and are increasing diesel production. But inventories continue to decline due to strong export demand.
• According to the IEA, the loss of refining capacity in the Middle East and damage to Russian facilities have pushed global petroleum product processing almost 5 million bpd below last year’s level — to around 81 million bpd. At the same time, the data is becoming increasingly unreliable.
• Some physical flows are moving into the gray market, while actual exports are becoming difficult to assess due to illicit oil movements and the use of opaque logistics schemes.
• The “shadow” fleet is becoming part of the new logistics system. According to available information, the UAE may be using a network of “shadow tankers” that transit Hormuz and then transfer the oil in the Gulf of Oman

Part of the shortage is being offset by the U.S., as well as by alternative export routes through Fujairah and Saudi Arabia’s Red Sea coast. But these routes are not a full substitute for Hormuz either. The arrangement is risky. For now, however, the gap between the value of the oil and the cost of the risk makes it economically viable.

So, what does this mean?

Oil is no longer trading solely on the fundamental balance of supply and demand. A persistent risk of logistics disruptions is now embedded in the price.

Traders can see the physical shortage but cannot accurately determine its scale. Export figures no longer provide certainty. For example, UAE oil exports averaged 3.38 million bpd in August versus 3.2 million bpd in 2025 — formally even higher than last year. But after reports of Iranian attacks on tankers linked to the Abu Dhabi National Oil Company, the situation could change quickly.

The main question is how much oil physically reaches the end buyer. And as long as Hormuz remains unstable, there is no precise answer. Even a recovery in crude oil exports does not guarantee a rapid decline in prices: the refining shortage, limited alternative routes, and high transportation risks can keep the premium elevated.

Without political stabilization, the range around $90 remains the working range, although the market is ready to trigger Stop Losses on both sides on any strong news-driven impulse. A new escalation could quickly send prices higher. Conversely, any genuine agreement on Hormuz could sharply reduce the geopolitical premium.

So we act wisely and avoid unnecessary risks.