Oil Prices May Exceed $120 Amid Hormuz Stalemate

Analysts have indicated that the ongoing stalemate over the Strait of Hormuz could lead to crude oil prices exceeding $120 per barrel by late September or early fourth quarter if oil flows remain restricted. Currently, traffic through the Strait is at two-month lows, and inventories are steadily declining.

The oil market is experiencing significant pressure, particularly on refined products such as diesel, gasoil, and jet fuel, due to disruptions in Middle Eastern and Russian refineries, which have driven refining margins to record highs. For several months, traders have been navigating two conflicting scenarios: the ongoing war and disrupted oil flows at the Strait of Hormuz versus the potential for a U.S.-Iran deal that could release millions of barrels of oil and refined products.

The situation has been exacerbated by threats and military actions from both the U.S. and Iran, with oil prices fluctuating dramatically in response to these tensions.