Gulf Insider
Drawing down crude inventories at a record pace, with SPR releases doing the heavy lifting to cushion the Gulf supply shock, only delays the move higher in crude oil prices. Once those buffers are depleted, oil risks being violently repriced higher. That is why the Trump administration’s race to secure a peace deal with Iran and reopen the Hormuz chokepoint has taken on new urgency in recent weeks. The longer the critical waterway remains disrupted, the greater the risk that the oil shock will escalate from a market event to a financial crisis, with higher crude prices feeding directly into inflation, consumer stress, and broader recession risk. The message from the SPR crude data this week, the largest ever draw, is very clear: The Trump administration is buying time to get a deal done with Tehran. If Hormuz does not reopen soon, the market will eventually force demand destruction through much higher prices. UBS analyst Arend Kapteyn penned a note Friday morning titled “When The Oil Buffers Run Out.” Kapteyn warned, “Oil prices can move much higher once inventories are depleted.” He continued: Earlier this week, SPR data showed drawdowns continue to accelerate, with 9.92 million barrels – a record […]
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