Oil supply shock to worsen as inventories fall further even if conflict ends - Reuters

<a href="https://news.google.com/rss/articles/CBMivwFBVV95cUxOajEzZERrVnZsdVJkNHRpUTN2cEM2YUpZN1R6VENfVDJyT24tSmpieWhXd093VklWQ09OWW81dDdrZk1wenRTcDNVbU4yeURkelVEVW54dmNMVXNQQmNlZFJ3UXVZcEZwY2w3SEhmX0tjdE53UWYySTZOM3BNMmdhS3pFajkxZF9jRUpaWWRPd3daak5yd0lXNkdJanFjWjNzQjlZcDhFVTdXS1ZMNDBnSUhWWG03QzA4MXpSaXpiQQ?oc=5" target="_blank">Oil supply shock to worsen as inventories fall further even if conflict ends</a>&nbsp;&nbsp;<font color="#6f6f6f">Reuters</font>

As diplomacy between the United States and Iran seesaws between apparent breakthroughs and inevitable setbacks, it is easy to lose sight of the larger stakes for the global economy: If the Strait of Hormuz does not reopen soon, then the world will almost certainly face a major oil supply crisis, forcing painful, sustained reductions in demand.

Oil supplies are set to tighten further in coming weeks even if the U.S. and Iran agree on a peace deal to end their war, as it will take weeks for oil shipments to resume from the Middle East Gulf and reach refiners worldwide.

Oil futures remain well below physical prices, suggesting markets are underestimating the scale and duration of the Middle East supply shock. Crude cargoes outside the Gulf are trading at extreme premiums as the prolonged closure of the Strait of Hormuz drains global inventories.

Oil supplies are set to tighten further in coming weeks even if the U.S. and Iran agree on a peace deal to end their war, as it will take weeks for oil shipments to resume from the Middle East Gulf and reach refiners worldwide.

Global oil inventories are acting as the primary shock absorber for the market following supply disruptions, with 280 million barrels already drawn down since the crisis began, according to a J.P. Morgan analysis.