Sanguine Strait Stoppage

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Become a paid subscriber today to view this full report exploring why crude prices have remained relatively low in the face of the largest supply shock in the history of the oil market, and join me in my hunt for ever-deeper oil & gas market context.If you’re already subscribed and/or like the free summary bullets, hitting the LIKE button is one of the best ways to support my research.Despite broad expectations that crude prices would rocket higher, the market reaction remains shockingly sanguine—with prompt Brent futures prices, somehow, spending most of April below $100/bbl—in the face of the currently-dire geopolitical context.The best explanation for the juxtaposition between headline shock and pricing is a combination of the (lack of) realized inventory declines as well as Presidential jawboning and the April 7th ceasefire.The impact to date of the Hormuz closure is most visible in term structure; while (still) elevated commercial inventories have provided a healthy buffer against upwards pressure on the curve, record backwardation in both physical and financial prices is placing a premium on prompt deliverable barrels as a signal to rapidly draw down those stocks.Frequent and strongly-worded verbal interventions by the White House have unnerved futures market participants; short-term downside is acute when another Trump post can, and will, sink the intraday price of crude by $10-15/bbl.The largest pullback in prices occurred after the ceasefire announcement on April 7th; there is no doubt that the ceasefire has reduced, for now, the threat of extreme escalation, inclu…