The global oil market could reach a critical “tipping point” within weeks as disruption in the Strait of Hormuz continues to squeeze supply and drain inventories.
Traders and analysts warn that stockpiles of crude and refined fuels may fall to dangerously low levels by the end of May, increasing the likelihood of sharp price rises and economic disruption.
Frederic Lasserre of Gunvor told the FT: “We do not have months,” adding there will be “huge pain” as economies are forced to curb fuel use.
“It goes beyond gasoline at the pumps to industry shutting down and you enter recession. The tipping point is clearly June. This is the point at which something has to give.”
Brent crude has already shown volatility, climbing above $126 a barrel last week week before easing back. However, further escalation could push prices beyond previous highs.
With stock levels falling and peak summer demand approaching, analysts warn the market is entering a “danger zone” where supply constraints could begin to significantly impact prices and economic activity.