Analyst: Market May Be Underestimating the Risk of Prolonged Crude Oil Supply Disruptions

Golden Ten Data reported on May 20 that Citibank stated on Tuesday it expects Brent crude oil to rise to $120 per barrel in the short term, noting that the oil market is underestimating the risk of prolonged supply disruptions. PVM analysts also pointed out that global oil inventories may drop to extremely low levels. However, market participants are showing some complacency regarding the potential consequences of this conflict. On Wednesday, two supertankers departed from the Strait of Hormuz; and to compensate for supply gaps caused by the war, countries are tapping into commercial inventories and strategic reserves. According to market sources citing data released by the American Petroleum Institute on Tuesday, U.S. crude oil inventories declined for the fifth consecutive week last week, with fuel inventories also trending lower. Another sign highlighting the intensifying supply tightness is that the UK has eased sanctions to allow the import of diesel and jet fuel refined overseas from Russian crude oil.