Morgan Stanley: A race against time in the global oil market

Global market OIL is a "race against time", because the factors that have so far limited the drastic jump in crude oil prices after the start of the war with Iran may not survive if The Strait of Hormuz remain closed until June, Bloomberg reported, citing analysts at the investment bank Morgan Stanley.

Despite a supply disruption of nearly a billion barrels of oil, crude oil futures (contracts in which two parties commit to buy or sell a commodity in the future) have not yet crossed 2022 levels following Russia's invasion of Ukraine.

Analysts led by Martijn Raths said that the market entered the crisis with sufficient reserves, while investors still expect the Strait of Hormuz to reopen in the foreseeable future, "Economic Times" writes.

It pointed out that higher crude oil exports from the United States and weaker imports from China were two key factors that helped buffer the global market from a bigger shock.

Photo: Razieh Poudat/ISNA via AP

Warning Stanley Morgan

However, Morgan Stanley warned that a prolonged closure of the Strait of Hormuz could begin to tighten markets again if it extends beyond what China or the United States can bear.

According to analysts, China currently appears relatively well positioned to manage disruptions. However, the ability of the United States to continue exporting crude oil at elevated levels is becoming increasingly difficult and appears to be under increasing pressure.

Morgan Stanley's baseline scenario still assumes the Strait of Hormuz will reopen before the United States is forced to cut exports and before China has to reverse falling imports. However, the bank warned that if disruptions persisted, oil prices may have to rise further to rebalance the market.

Source: Economic Times

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