Does the market know anything about oil?

Oil prices remain surprisingly stable despite ongoing geopolitical instability in the Middle East and restricted shipping through the Strait of Hormuz. While analysts previously predicted significant price spikes, the market has been buffered by the release of strategic petroleum reserves and shifting trade patterns, including China’s reduced import activity. The United States has emerged as the global supplier of last resort, drawing down its strategic petroleum reserves to record lows to stabilize global energy markets. These reserves, stored in salt caverns, face structural limitations, raising concerns about the long-term sustainability of this strategy. Furthermore, a critical bottleneck exists in the refining sector, where global capacity is stretched to its limit, causing diesel and gasoline prices to rise even as crude oil benchmarks remain relatively contained. FT Energy Editor Malcolm Moore highlights the lack of transparency in current supply data, complicating market predictions.