Even before the ceasefire deal was announced, oil prices were dropping as countries tapped their strategic petroleum reserves and a flow of tankers escaped the strait. Dozens of additional tankers have left in the last two weeks, providing further relief to global oil markets. And with some sanctions lifted, Iran has exported more than 40 million barrels of oil to international markets.
Still, great uncertainty remains. Or as Johnston put it, the price drop is a “temporary sugar high” until empty ships return through the strait to load up more crude oil.
That means oil prices are still at risk of a quick spike. The ceasefire also remains incredibly fragile. Iran attacked at least two ships in recent days and the U.S. launched counterstrikes. The latest round of tit-for-tat strikes reduced the number of ships leaving the strait from 57 on June 24 to 12 on June 28, according to Kpler.
China could also ramp up oil imports, Johnston said. And the buffer of oil storage inventories in multiple countries that kept price artificially low in the last few months is virtually gone, as some facilities hit tank bottom, making the market far more vulnerable to future disruptions.
Greg Priddy, an expert on energy market disruption who worked at the U.S. Energy Information Administration in the George W. Bush administration, said many things could still cause oil to spike and few are in Trump’s direct control.
The war’s effect on global energy prices “was less than a lot of us thought, but it’s still a ticking time bomb,” he said.
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