Yemisi Izuora
Uncertainties are still pushing global energy prices high, as the U.S. extension of the ceasefire with Iran has done little to restore oil and gas flows through the Strait of Hormuz.
Given the uncertain market scenario, Barclays has warned that the scale of disruption remains significantly underpriced in both oil futures and energy equities.
Analyst Lydia Rainforth stated in a note to clients that the Strait has now been closed to oil and gas flows for over 50 days, with more than 600 million barrels blocked and over 10 million barrels per day shut in.
The continued U.S. blockade of Iranian ports has left physical markets tight, with “limited to no passage being allowed from the Iran side either,” according to Barclays.
The bank added that an estimated 20,000 seafarers remain stranded on vessels inside the Persian Gulf, with vessels continuing to face security threats. A container ship reported being fired upon by an Iranian Revolutionary Guard Corps gunboat on Wednesday, sustaining heavy damage to its bridge.
UAE Minister of Industry and ADNOC chief Dr. Sultan Al Jaber added his voice to the alarm, calling for safe passage and stating that “Hormuz belongs to the world. It must be returned to the world.”
For Barclays, the market has yet to fully reckon with the disruption. The firm argues that oil equities are currently pricing in a long-run oil price of just $60–$65 per barrel and recommends investors “take advantage of recent weakness to build positions” ahead of what it expects will be higher oil prices in the coming months