Claudio Galimberti, chief economist at Rystad Energy, warns that unless the conflict in the Middle East is resolved, oil inventories will continue to decline, leading to higher prices. Currently, Brent crude is priced around $94 per barrel.
Galimberti suggests that increasing the oil flow through the Strait of Hormuz from two million barrels per day to ten million could alleviate the current oil crunch within three to six months. However, he cautions that even if this crisis is addressed, the market may face a significant oversupply by 2027 due to OPEC's unwinding, particularly following the UAE's exit from the cartel.
The ongoing volatility in oil prices and other asset classes is largely driven by the uncertainty surrounding the Iran-U.S. negotiations and the fragile ceasefire, which has persisted for over 100 days since the onset of the conflict