This explains the spike in pump prices for diesel relative to gasoline – $200 per barrel of oil remains an extreme scenario
"The planet will not stop moving."
This is how a refinery market executive describes the oil transport problems originating from the conflict zone in the Strait of Hormuz, noting that oil shipments will be rerouted from other regions, though this will contribute to a rise in international prices. The trajectory of oil prices is currently on a global "scale," seeking balance daily based on developments, supply, and demand. Regarding the replenishment of stocks, he stated it is the primary goal of the global refining community, which will pay current market rates despite the risk of a sudden price drop, while a continued rise would maximize refinery profits by increasing gross profit margins.
At what prices are strategic reserves being offered?
The supply of strategic reserves carries value based on the price at which they are offered, which cannot be significantly lower than market rates. According to data from the International Energy Agency and OPEC, the daily oil requirements of the global economy range from 102 to 104 million barrels, reaching 37 to 38 billion barrels annually. Between 5.8 and 6.1 trillion liters are consumed in a single year.
The US recently reduced its stockpiles
In the current Hormuz crisis, the US, Japan, and South Korea have already proceeded with the release of strategic reserves, while Europe is in the preparation stage for a coordinated intervention. In contrast, China and India maintain a more cautious stance, choosing to safeguard their stocks in view of a potential escalation. The United States released approximately 30 million barrels from the Strategic Petroleum Reserve (SPR), Japan 5 million barrels, and South Korea 4 million barrels. In Europe, countries such as France, Italy, and Spain are preparing a coordinated release of approximately 10 million barrels in total.
International oil price per 1,000 liters strengthened by 63.3%
One day before the attack on Iran, the international price per 1,000 liters for 95-octane gasoline stood at $709, the price of diesel at $747 per 1,000 liters, and heating oil at $727 per 1,000 liters. Yesterday, March 26, the corresponding international prices for gasoline were at $988, diesel at $1,220, and heating oil at $1,160 per 1,000 liters. The international market is pricing diesel higher relative to gasoline because the fuel is essential for the functioning of an economy. This means that in 26 days, the international price of diesel increased by 63.3%. The price of gasoline per 1,000 liters rose by 39%, while heating oil saw an increase of 59.5%.
$200 is not a "baseline forecast," it is an extreme risk scenario
Estimates for oil at $200 per barrel stem primarily from scenarios of extreme geopolitical escalation and not from the baseline forecasts of major firms. Banks such as Goldman Sachs and Barclays believe that in the event of a prolonged disruption of flows through the Strait of Hormuz, prices could move to levels above $130–$150, with the potential for further increases in the case of a total transit blockade.
Nikos Theodoropoulos
ntheo@bankingnews.gr
www.bankingnews.gr
Readers’ Comments