Brent: $78, WTI: $74. Long way to go to reach $110 bbl again.
Inflation has stayed for years. Iran's official inflation rate for the last 2 years has been over 50%. What a ridiculous comment.
I think there is misconception on the oil price so I will try to break this down.
The IEA coordinates strategic oil reserves for a group of countries including the US, Japan, South Korea and many European countries. Around March, between government reserves and oil industry stocks, they had around 1.8 billion barrels available.
When the Iran war issue kicked off, the IEA committed to releasing around 400 million barrels to calm the market. That 400 million wasn’t all gone by May, but by around late June / early July. So you can see why trumpy pumpy wanted a ceasefire quick.
Now someone might say, okay, but they still had around 1.4 billion barrels left. That is true. But at the height of the war, the market was losing something like 14 million barrels per day. If you do the simple maths:
1.4 billion ÷ 14 million per day = about 100 days
So even after the first 400 million barrels, if things carried on at the worst level, the remaining emergency reserves could theoretically be gone in just over three months.
In the real world countries would never wait until the reserves hit zero. Panic would start way before that. The market would start thinking hang on, if they need another emergency release already, then there really is not enough oil. That is when prices could have gone crazy likely above $125 per barrel, maybe over $150.
That is why the timing of the MOU / ceasefire around mid-to-late June is interesting. It happened just as the first big emergency release was getting close to the point where another release might have been needed.
The other big factor is China. Around 20 million barrels per day normally moves through the SOH. China gets a huge amount from that route over 5m b per day. So if China reduced imports and used some of its own reserves instead, that would take a lot of pressure off the market. I think some private deal between trump and China was made to keep prices low. If China had kept buying normally while Hormuz supply was disrupted, the oil price could have gone much higher much faster.