MacroVoices #539 Rory Johnston: Hormuz Crisis, is it Really Over?

The global oil market currently faces a complex supply-demand dynamic defined by the ongoing Hormuz crisis and a significant divergence between crude and refined products. While geopolitical tensions initially threatened massive price dislocations, a surge in tanker flows and strategic petroleum reserve releases have created a short-term crude surplus, evidenced by prompt contango in futures curves. Conversely, refined product markets remain exceptionally tight, with elevated crack spreads reflecting limited global refining capacity and the impact of regional conflicts on supply chains. China’s discretionary reduction in imports further complicates the outlook, acting as a major swing factor in market balance. Investors are shifting focus toward the refining sector, where strong margins offer a more direct expression of current market tightness than the volatile flat price of crude oil, as evidenced by recent momentum in stocks like Valero.