🛢️ Brent crude has climbed to monthly highs after renewed concerns over disruption in the Strait of Hormuz reignited fears of tighter global oil supplies. The return of the “NACHO” trade, short for “Not A Chance Hormuz Opens”, has fuelled the strongest rally since the pandemic.
🚢 Transport costs are rising as the US plans to charge for escorting oil tankers through the region, while investors reassess whether markets had become too complacent about easing Middle East tensions.
📉 Global oil inventories continue to tighten. US strategic petroleum reserves have fallen to their lowest level since 1983, while the International Energy Agency reports significant declines in worldwide stockpiles, reducing the market’s ability to absorb future supply shocks.
🏦 Goldman Sachs believes new pipeline projects will eventually reduce reliance on the Strait of Hormuz, allowing much larger volumes of oil to bypass the region. However, these infrastructure upgrades are expected to take several years before providing meaningful relief.
⚠️ Although weaker Chinese demand and slower global consumption growth may limit Brent’s upside over the longer term, supply risks remain firmly in focus, keeping oil prices supported in the near term.
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