The global oil market has faced major changes since late February. The price response to the biggest supply disruption ever has been surprisingly calm. This stability was not because of a lack of problems; instead, there were supports in place to manage the situation. However, this support system has changed.
For nearly four weeks, the market dealt well with disruptions from the Strait of Hormuz, where 17.8 million barrels of oil per day were lost. This was possible because there were enough reserves available at the start. Now, these reserves are mostly used up, and the market is no longer robust.
European oil refiners will soon feel the impact, as they will compete more with Asian buyers for available oil. The market has shifted from being stable to being fragile. If another disruption occurs, like damage to pipelines or natural disasters, it could cause significant price increases.
The world previously expected a surplus of oil this year. However, the situation has now changed, and almost 500 million barrels of oil have been lost. The responses from governments to release oil reserves have not been enough to compensate for these losses. Therefore, every day becomes more critical for the oil market.
