From Economist’s Chair: Oil in Focus “Storm on the Water”

Crude futures are easing as Saudi supply returns, but tight physical barrels, Hormuz risks and diesel stress mean sentiment could turn fast

In this week's episode, David notes the easing of prices since September highs as recovery in crude pipeline and tanker flows has been absorbed by the market. But attacks on vessels in the Strait of Hormuz are if anything increasing, physical prices are still signalling alarm and further draws in already-tight distillate stocks are on the agenda. As the Atlantic hurricane season progresses, attention is turning towards Gulf Coast diesel and LNG exports.

Futures ease, physical stays tight: Crude futures have pulled back since the Saudi East-West pipeline restarted, but physical North Sea Dated still trades at a steep premium to Brent futures.

Hormuz flows are recovering despite attacks: Record tanker freight rates are tempting shippers to run the gauntlet, and crude shipments through the Strait are climbing back towards pre-crisis levels.

Diesel and gas are the next worry: A G7 emergency stock release has eased pressure, but diesel margins remain extreme and a tropical storm is heading for US Gulf Coast refineries and LNG facilities, so sentiment could turn quickly.