Barclays: Iran Conflict Causes 14.5M bpd Oil Disruption

Key Disruption Figures

Barclays reports a net oil supply disruption of approximately 14.5 million barrels per day amid the ongoing Iran conflict, which has severely impacted global energy flows through a critical maritime chokepoint.

Situational Overview

Oil exports through the Strait of Hormuz, which handled about 25% of global seaborne oil trade last year, have fallen to 0.4 million barrels per day. This represents a significant drop from 18.7 mb/d before the conflict escalated. In response, alternative routes from Yanbu and Fujairah have increased their combined output to 6 mb/d.

Economic and Market Impact

The supply shortage has caused a significant market reaction. The prompt 3-month calendar spread of the WTI futures curve surged to over 100% on a three-day moving average basis, a level of tightness that exceeds the peak reached after Russia’s invasion of Ukraine.

Outlook and Projections

Barclays' analysis suggests Brent crude prices could reprice to $110 per barrel if the disruption extends until the end of May. The bank's base case forecast remains at $85 per barrel, which assumes a normalization of shipping through the Strait of Hormuz by early April.

FAQ

Q: What is the total net oil disruption?
A: Barclays calculates a net disruption of approximately 14.5 million barrels per day.

Q: How have oil prices reacted?
A: The WTI futures curve indicates extreme market tightness, surpassing levels seen after the Ukraine invasion began.

Q: What is the price forecast if the conflict extends?
A: Brent crude could reach $110 per barrel if the situation does not normalize by the end of May, according to Barclays.

Source: Investing.com