Brent crude is trading higher overnight, up roughly USD 4.5/bl from yesterday’s close. That said, prices were at one point up nearly USD 8/bl during the night before easing back this morning. Brent is currently hovering around USD 98/bl.

This week has been extraordinarily volatile. We have seen intraday highs at USD 119.5/bl and intraday lows at USD 81.16/bl: all within roughly 38 hours. Every headline is being parsed for signs of escalation or de-escalation, and price action reflects exactly that.

The latest political headlines do little to calm the market. President Trump told Axios on Wednesday that the war with Iran will end “soon” because there is “practically nothing left to target.” On the surface, that sounds like an attempt to signal that the campaign is nearing its end.

Yet, the rest of the reporting points in the opposite direction. According to the same article, neither US nor Israeli officials have received any internal guidance on when military operations are expected to stop. Israeli Defense Minister Israel Katz said the war will continue “without any time limit” for as long as necessary to achieve its objectives. In parallel, both US and Israeli officials are reportedly preparing for at least two more weeks of strikes inside Iran.

That is a major mismatch. Trump is talking as if the campaign is close to completion, while those involved operationally appear to be preparing for something much more prolonged. For the oil market, that alone is enough to keep prices elevated. Even if the White House wants to calm expectations, the underlying signal is still that this may not be over anytime soon.

The “at least two more weeks of strikes” headline matters when you put the numbers into context. We have already had roughly 11-12 days of conflict. Add another 14 days, and we are suddenly looking at around 25 days in total. Apply that to roughly 20 million bl/d of flows through the Strait of Hormuz, and you are talking about something close to 500 million barrels of disrupted supply to global markets.

That is where the 400-million-barrel SPR release headline needs to be understood properly. Yes, 400 million barrels sounds huge. But the key issue is not the total volume (it is the daily release rate). The maximum sustainable release rate is roughly 2 million barrels per day, meaning a 400-million-barrel release would take around 200 days to fully hit the market.

So even though the headline number looks impressive, the short-term offset is limited. If a major disruption removes 15-18 million bl/d from the market, roughly the scale tied to Hormuz flows, then a 2 million bl/d emergency release barely scratches the surface.

i.e., SPR releases are likely more to signal and calm market psychology than replacing lost supply.

There has also been some confusion around the US reserve-release headlines. The 172 million barrels referenced in some reports are not additional barrels on top of the 400 million already announced, they are part of the same broader release package.

Our base view remains that Trump will want this war to end. Oil prices and the approaching midterm elections will push him in that direction. But the much harder question is what it would take for Iran to “reopen” Hormuz fully and safely afterwards. Compensation for rebuilding damaged infrastructure? Guarantees against renewed attacks? Some broader political or security arrangement? That remains completely unclear.

Another important point is that two more weeks of strikes also mean two more weeks of risk for lasting damage to oil infrastructure. Even if the conflict eventually de-escalates, the market may still have to deal with damaged loading facilities, terminals, pipelines or shipping routes. That is part of what makes this more serious than a simple headline-driven spike.

At the same time, some of the “lost” supply may in practice be delayed rather than permanently destroyed. Oil has been built up inside the Gulf during the disruption, and some of those barrels would start flowing back to global markets once the Gulf reopens. So, part of the current shock could later reverse as trapped supply is released.

Overnight headlines underline just how nervous the market remains. Trump said he wants to refill the SPR quickly, Oman reportedly began evacuating ships from Mina al Fahal, and Brent briefly moved back above USD 100/bl as disruption hit a key Omani port. In addition, China has reportedly told refiners to suspend all refined fuel export cargoes: another sign that governments are shifting into supply-security mode.

Another thing often overlooked in these situations is hoarding behavior. If governments or market participants start stockpiling aggressively, the effect can make the situation worse. That is exactly what happened during the 1970s oil crisis, when precautionary buying added roughly 2-3 million bl/d of extra demand on top of the underlying supply shock. That kind of behavior can amplify price spikes very quickly. China has already been building inventories over the past year, and there are signs that other large importers such as Japan and South Korea are also securing as many barrels as they can.

Finally, on naval escorts: we have highlighted before that even if they are introduced, flows would still likely remain well below normal. Lloyd’s estimates that naval escorts could in theory protect enough ships to keep some traffic moving, but that this would require more naval assets than are currently available. Even in that best-case scenario, less than 10% of normal traffic may get through, and realistically, even that may prove optimistic.

In short, inventory releases may help at the margin, but they are nowhere near large enough to offset a major physical disruption. The real issue is not the headline volume of reserves; it is whether physical flows through Hormuz can resume in a credible and sustained way.

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Yesterday’s US DOE report was somewhat mixed, but with the key point being that commercial crude inventories rose by 3.8 m bl on the week to 443.1 m bl. Even after the build, crude inventories still sit around 2% below the five-year average for this time of year.

On the products side, the picture was more constructive. Gasoline inventories fell 3.7 m bl, while distillates declined 1.3 m bl. Gasoline stocks remain about 5% above the five-year average, but distillates are now roughly 2% below. Total commercial petroleum inventories fell by 2.0 m bl on the week, which softens the bearish read from the crude build alone.

Refinery activity picked up further, with crude runs increasing by 328 k bl/d to 16.2 m bl/d, while utilisation rose to 90.8%. Product output also moved higher, with gasoline production at 9.9 m bl/d and distillate production at 4.9 m bl/d.

On the demand side, the four-week averages remain reasonably supportive. Total products supplied are running 1.9% above the same period last year, with gasoline up 0.8%, distillates up 0.4%, and jet fuel showing the strongest growth at +7.3% YoY.

i.e., the crude build is the headline, but the broader inventory picture is less bearish than that suggests. Product draws continue, total commercial inventories fell, and crude stocks remain slightly below normal for the time of year.

IEA Proposes Largest Ever Oil Release From Strategic Reserves (WSJ). Brent up 3.3%. Doesn’t look like the oil market thinks that ”largest ever” release of strategic reserves will help much against current crisis. Brent up 4% to $91.3/b. 

Buy Brent 2027 at close to ”neutral price”. Brent crude for year 2027 is trading at $71.6/b. That is just $3.6/b above the ”neutral price” of $68/b. When the global oil market fluctuates between surplus and deficit, the Brent spot price will swing below or above this ”neutral price” of $68/b. Sometimes way below as in spring of 2020 and sometimes way above.

Brent spot is trading $22/b above the ”neutral price” of $68/b. The Brent 1M price is trading at $90/b this morning and $22/b above the ”neutral price” in an expression of risk, stress and disruption of oil logistics as the Persian Gulf is closed. But the market is pricing Brent Y2027 at $71.6/b and a premium of only $3.6/b above the neutral price. Implicitly assuming that the oil market will be normal in 2027 with normal inventories and normal supply. Everything restored.

If global stocks draws down 500 mb, then $80/b 2027 is the price. More if oil infrastructure damaged. Brent averaged $81/b in 2023/24. Then global visible stocks rose 500 mb in 2025. Mostly east of Suez. Brent then averaged $63/b in 4Q25. If the Strait of Hormuz is closed for 25 days, then global stocks will draw down by 500 mb. Brent should then trade around $80/b just due to the inventory drawdown. Higher if inventories are drawn down more and yet higher if installations of oil production, processing, refining or shipping logistics are damaged. Takes significant time to repair and restore.

When the market now prices Brent 2027 at only $71.2/b it thus assumes that inventories will only draw down by some 250 mb. Ops, we are already there as the Strait of Hormuz now has been closed for 11-12 days. It also assumes that there will be absolutely no lasting damage to oil infrastructure in the Persian Gulf.

Risk that Israel will damage Iranian oil infrastructure. It is increasingly argued that Israel and the US have different strategic goals. The US/Trump wants to end this as quickly as possible. Wants to see oil prices fall quickly back to normal. Israel however probably wants to use this once in a lifetime opportunity to totally destroy and degrade Iran altogether. High or ultrahigh oil price not so important. Leaving Iran with no water, no oil, no money, no economy and very limited capability to rebuild its country (and weapons systems and nuclear facilities) after the war.

Brent 2027 is just one Israeli bomb away from jumping to $80/b or higher. Brent crude calendar 2027 today trading at $71.6/b is just one Israeli bomb (hitting Iranian oil infrastructure) away from trading at $80/b or higher. Global inventories have already suffered 11-12 days of Hormuz closure. I.e. the world has lost 220 – 240 mb of oil stocks. And as stated above, the price of $71.6/b is only $3.6/b above the ”everything is normal price”. What a bargain. Buy it!

Fear is starting to rush through the veins Birol. Looking back at recent events. Fathi Birol (IEA) last week: ”Plenty of oil in the market. No need to release strategic reserves.” Then G7 preparing for release. And now ”IEA Proposes Largest Ever Oil Release From Strategic Reserves (WSJ)”. This shows how the sense of fear is starting to rush through the veins Birol.

Oil price spike forced Trump to the podium. Another is on Monday. Brent spiked to $119.5/b. That forced Trump to jump to the podium reading a statement (quite rare that he reads a pre-written note) of how great everything is going. That all will soon be over. Any issues with the oil market and oil prices will be solved. Trump has the oil markets back. Market believed him and Brent fell sharply. This shows the power of oil. It makes even the most powerful person in the world jump to the podium in an effort to try to talk away the physical problems of the world. It shows that Trump is not in control. Iran declared right after the speech that it is not up to Trump to decide when the war is over. Iran will decide when it is over. Trump might declare victory, pack up and go home. That will however not give any guarantees for the opening of the Strait of Hormuz. That is up to Iran.

Iran has the upper hand. They control the Strait of Hormuz. They control the oil. Trump, Birol and the rest are basically talking about it.

No signs that the world is able to open the Strait of Hormuz by force as promised. We have seen reassurances over the past week that insurance schemes will be set up to cover the war risks so that ships can go through. And that warships will provide safe passage in convoys. Nothing of that so far. It doesn’t take very expensive weapons (Iran has loads of Shahed drones) to shoot at the VLCCs going through. A drone now and then will keep flow of oil through the Strait of Hormuz muted if not fully closed.  

Oil for all or oil for no one. “Strait of Hormuz will either be a Strait of peace and prosperity for all,” Ali Larijani, Iran’s top national security official, said in a social media post on Tuesday. “Or it will be a Strait of defeat and suffering for warmongers.”

Brent Y2027 and beyond is such a bargain!

European gas markets are no longer repricing risk. They are pricing disruption.

Since yesterday morning, TTF has moved violently higher. After trading around EUR 39/MWh early yesterday, the market spiked to EUR 49/MWh in the afternoon, a EUR 10/MWh move in just a few hours. That first leg higher followed reports of halted Qatari LNG production, precisely the operational vulnerability we highlighted yesterday: limited storage buffers, and Ras Laffan as an exposed target.

Later in the evening, prices retraced to around EUR 43/MWh. The second leg was even more aggressive. Overnight, TTF surged from ish EUR 43/MWh to nearly EUR 60/MWh as we write. The trigger was explicit rhetoric from an advisor to the Iranian Revolutionary Guard stating that the Strait of Hormuz is closed and that vessels attempting to transit would be targeted.

That materially shifts the probability distribution. This is no longer about shipping hesitation. This is about declared closure risk. It was some pullbacks this morning linked to reports that Chinese gas buyers are pressuring Tehran to keep the Strait open. That is logical: Asia is the primary destination for Gulf LNG. But Iran has now signaled intent. At this stage, it looks like only meaningful de-escalation from Washington would materially cap upside momentum in oil and gas.

Physical vulnerability is real. Yesterday we highlighted three core vulnerabilities:

#1 20% of global LNG trade transits Hormuz.

#2 Qatar exports ish 9-10 Bcf/d through a corridor with virtually no bypass capacity.

#3 Qatari liquefaction operates with only 1-2 days of storage buffer.

The third point ref. Qatari LNG is now central. Liquefaction trains run continuously. If vessel loading stops due to distruptions or physcial attack on infrastcutre, storage fills rapidly. Once tanks approach capacity, output must be reduced. Restarting trains is not instantaneous. i.e., maritime disruption becomes upstream supply loss as we speak.

Unlike some of the oil, LNG cannot be rerouted through pipelines in the Persian Gulf. Also, the global LNG system is narrower, more concentrated and structurally less flexible. There are no strategic LNG reserves of scale. Removing, or even temporarily freezing, ish 20% of global trade creates immediate tightening across both basins.

Europe is indirectly exposed: while 80%+ of Hormuz LNG volumes are Asia-bound, Europe is not insulated. Roughly 8-10% of European LNG imports are indirectly linked to Gulf supply. More importantly, if Asia loses Qatari volumes, it bids aggressively for US cargoes. That tightens the Atlantic basin and lifts TTF.

The backdrop is not comfortable. European storage sits around 30%, well below the ten-year seasonal average of 44%. March weather remains slightly bearish (NW Europe ~2°C above normal), which provides short-term demand relief, but weather cannot offset sustained loss of large LNG volumes.

Going forward, duration is everything. Our base case yesterday assumed 4-5 days of meaningful disruption followed by a messy partial restart. That assumption now looks optimistic if rhetoric translates into sustained closure.

Iran does have strong economic incentives to avoid prolonged closure; its own crude exports depend on the strait. But if Tehran perceives the situation as existential, economic self-interest may become secondary. That is the key swing factor.

This is ultimately an endurance game. The question is not whether the strait can be fully sealed, but how long meaningful disruption can be sustained.

At current levels, the market appears to be pricing roughly a 1-2-week disruption, effectively a fleet productivity shock (shipping delays, insurance hikes, restart lag) rather than structural long-term supply loss. If Qatari output resumes relatively quickly, TTF likely consolidates in the EUR 40-50/MWh range.

If disruption extends to one month, roughly 7 million tonnes of LNG will be removed from the market. Europe could effectively lose around 5.5 million tonnes per month through displacement effects. In that case, inventories fall more sharply and TTF moves decisively into EUR 60+/MWh territory.

A multi-month Ras Laffan outage is a different regime entirely. At that point, the system risks a 2022-style squeeze, where EUR 100/MWh and above cannot be excluded and demand destruction becomes the primary balancing mechanism.

Yesterday we framed EUR 90-100/MWh as a tail scenario. With TTF already printing near EUR 60/MWh, the gap between “tail” and “plausible stress case” is narrowing, but sustained supply loss over 1-2 weeks is still required for that scenario to materialize.

Iran has made clear that energy flows are part of its retaliation strategy. The key variable from here is endurance. Even partial choking of flows, combined with persistent strike risk, is sufficient to keep prices elevated. A prolonged period of instability would pressure global energy prices and, indirectly, US gasoline prices, a politically sensitive variable heading into US midterm elections.

i.e., unless a diplomatic off-ramp emerges, duration of disruption is now the central driver.

In short: availability of LNG exports from the Persian Gulf, and the restart timeline at Ras Laffan, are the two dominant swing factors from here. Volatility will remain elevated. The system is too concentrated and too inflexible to absorb prolonged disruption without further repricing.