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<Research>JPM: Oil Pricing Shifting from Geopolitical Risks to Disruption Forecast w/ Scale Surge Estimated by Weekend
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JPMorgan released a research report last Friday (6th) saying that commercial shipping through the Strait of Hormuz has almost completely stalled, with activities mainly limited to Iranian vessels. Due to the inability to transport crude oil through the waterway, oil producers were forced to move inventories offshore and to other facilities. Since the end of February, approx. 7 million barrels of crude oil have accumulated about 46 million barrels on tankers, 22 million barrels at refiners, and 8 million barrels in commercial storage facilities, equivalent to about 4.5 days of regional crude oil exports. Most of the inventory appears to be concentrated in Saudi Arabia. The broker believed that the market is shifting from merely pricing geopolitical risks to facing actual operational disruptions. Refinery shutdowns and export limitations are beginning to affect crude processing and regional supply flows. In just six days, Iraq has cut supply by about 1.5 million barrels per day, and Kuwait seems close to storage limits. The country has reduced refining by nearly 600,000 barrels per day, almost halting all export-oriented refining capacity, maintaining only what is needed for domestic consumption. The countdown to the next wave of production halts is driven by export bottlenecks and refinery constraints, JPMorgan added. If current trends continue, the scale of disruption could rise from 1.5 million barrels per day to 3 million barrels per day by the weekend; by next weekend, cuts could exceed 4 million barrels per day, even approaching 6 million barrels per day if product storage reaches its upper limit. AASTOCKS Financial News Website: www.aastocks.com |
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