Paul Sankey, president at Sankey Research, foresees an "ongoing, absolute disaster" for the global oil market in the coming two to three months. He stresses that this deteriorating situation is a certainty, even if the Strait of Hormuz were to reopen in a matter of days. Sankey's bleak outlook underscores the severe challenges facing the oil market, driven by geopolitical tensions and supply disruptions.
Sankey has consistently highlighted the impact of the Iran war on energy prices and the risks associated with a disruption to the Strait of Hormuz. His analysis from CERAWeek in Houston earlier in the year emphasized how high energy prices are severely impacting economies globally. His recent statements reiterate these concerns, indicating a worsening trend rather than a resolution.
The broader market context supports Sankey's concerns, with oil prices remaining elevated. Brent crude has repeatedly breached $100 and held in the low-to-mid $100s, while WTI has traded above $92 per barrel. Shipping costs for Very Large Crude Carriers (VLCCs) have surged, reaching a record $1.1 million a day for the Persian Gulf to Asia route, reflecting a 12-fold increase in just a few months. This indicates significant tightness in the physical market, further contributing to inflationary pressures.
