Oil inventories near critical levels warns analyst
Markets are reacting to every “little skirmish” in the conflict between the US and Iran, says oil and gas specialist Cornelia Meyer.
“Within the next few months or few weeks, we need to see things getting back to normal,” Meyer told Al Jazeera, speaking from Bern, Switzerland.
Markets have not reacted more, however, because “we had people with inventories that they could draw from [even though] they’re close to tank bottom,” she said.
China – the new swing consumer – has imported so much less than it did before, Meyer added.
But markets are not predicting escalation because the US has midterms coming up, so they may not want a full-fledged war, said Meyer. Meanwhile, Iran has economic problems, so they may also not want a full-fledged war, she said.
“But what markets are not factoring in, is that we are close to tank bottom in the inventories, and what they’re also not factoring in, is this open and closed state of the Strait of Hormuz makes it very difficult for insurers to insure cargoes and ships,” said the analyst.
While many ships have left the strait, not many have entered, said Meyer.
The developed countries of the OECD will be able to manage another hit as they have still some inventories, but for developing countries, it will be “very bad”.