There will be plenty of oil, but it will be difficult and expensive

XBR/USD

Key zone: 95.00 - 103.00

Buy: 103.50 (on a decisive break of 101); target 108.50; StopLoss 102.00

Sell: 93.50 (on strong negative fundamentals); target 87.50; StopLoss 95.00

The situation in the Middle East continues to set the tone for the oil market: the absence of clear prospects for the end of the conflict and an obvious winner forms a wide sideways range with sharp short-term fluctuations both in crude oil and petroleum products.

Prices for key benchmarks have already increased by 25–40% and have once again consolidated above $100 per barrel. At the same time, even a coordinated release of about 400 million barrels from strategic reserves produced only a short-term effect and failed to stabilize the market.

The geopolitical environment continues to deteriorate. Donald Trump has so far failed to form a coalition to ensure the security of shipping in the Strait of Hormuz, which remains under constant threat of attacks from Iran.

Reminder of key pressure factors

The main impact on the oil market is currently exerted by disruptions in transportation through the Strait of Hormuz, a supply shock, and the simultaneous reduction of energy supplies.

Iran has for the first time carried out successful attacks on oil and gas infrastructure facilities in the region: the Shah field in the United Arab Emirates and the Majnoon field in Iraq were hit. Saudi Arabia was also subjected to large-scale drone attacks.

Tehran openly states its readiness to keep the strait under fire control until a peace agreement is reached on its own terms.

Additional pressure is also created by other events:

• The strategic port of Fujairah in the UAE — a key hub for oil and fuel transshipment — has completely halted shipments after strikes on the export route bypassing the Strait of Hormuz.
• A terminal operated jointly with Koninklijke Vopak NV has also ceased operation of its marine berth.
• The rise in energy prices is already directly affecting consumers in the United States and Europe: gasoline prices in the U.S. have reached the range of $3.4–3.6 per gallon, indicating a real supply shortage.
• Global oil inventories may fall to critically low levels within a few weeks if the Strait of Hormuz remains effectively closed. U.S. authorities allow for increased supply from strategic reserves, but this only heightens the risks of market imbalance.
• Against the backdrop of supply disruptions from the Middle East, Kazakhstan and Azerbaijan are benefiting: premiums for CPC Blend and BTC crude grades have noticeably increased relative to Brent.

So far, Iran’s threats to “drive” prices to $200 look like routine blackmail; however, as the energy crisis deepens, such a scenario can no longer be considered unlikely.

And what is the result?

Investors still expect a quick resolution of the crisis, linking their hopes to the actions of Donald Trump. The market has even formed a conditional concept of the “Trump put option” — the expectation that the president will be able to limit damage and stabilize the situation.

However, this optimism is increasingly inconsistent with reality. Analysts note active intervention by the administration in the oil market, while major banks are recording large-scale sales of oil options above $100 per barrel.

Even in the case of a rapid restoration of shipping through the Strait of Hormuz, the situation will not normalize instantly. According to the International Energy Agency, since the beginning of the conflict, production in the region has decreased by about 10 million barrels per day. It may take weeks or even months to restore these volumes.

As long as the strait remains a restricted and dangerous route, the upward trend in oil persists. A retest of the $110–120 range and higher looks increasingly likely.

The main “bearish” scenario is a rapid end to the conflict. In this case, futures markets allow for a return of oil prices to the $65–70 range if the situation normalizes within 2–3 weeks.

If the conflict drags on, the global energy market risks facing a full-scale inflationary shock.

So we act wisely and avoid unnecessary risks.

Profits to y’all!