Amrita Sen, founder and director of market intelligence at Energy Aspects, said oil futures prices are disconnected from reality in the Middle East and should be closer to $150 per barrel. She noted that the market is ignoring ongoing hostilities, including attacks on Saudi infrastructure by Iran-aligned Houthis, and the resulting shipping crisis. The crisis has disrupted shipping through the Strait of Hormuz, with a large tanker fleet tied up in ship-to-ship transfers, pushing freight rates to record highs. Russell Hardy of Vitol described the situation as an 'unprecedented' shipping crisis, noting there is not enough shipping to meet demand. Despite the turmoil, crude oil futures fell early in Asian trade, but Brent crude held above $100 a barrel and was on track for a weekly gain as attacks on tankers in the Strait of Hormuz increased, threatening to disrupt Middle East oil supply.
Sen attributed the market's complacency to mid-term elections and the belief that U.S. Government actions would lower prices. She noted that the market seems to ignore actual infrastructure damage and shipping disruptions, despite the crisis extending into the shipping sector. The situation highlights a disconnect between futures prices and physical crude prices, with analysts warning that the market is not accurately reflecting the true state of the region.
The ongoing conflict and shipping disruptions have created a complex situation where oil prices are not aligning with the reality of supply chain challenges.