Commodity trading giant Vitol Group: The oil market is highly focused on the movements in the Strait of Hormuz, with volatility far exceeding the past.

Commodity trading giant Vitol Group's Americas CEO Ben Marshall said that the oil market is currently pricing in the reopening of the Strait of Hormuz sooner rather than later. He said on Monday that the market is "almost entirely focused" on when more oil will resume flowing through the Strait of Hormuz. Marshall's comments came as oil prices saw a sharp decline. US President Trump said on Monday that the US and Iran "could reach an agreement within 5 days or even shorter." Trump also stated that the US is "very much intent on reaching an agreement with Iran." Despite Iran denying engaging in talks with the US. After Trump's remarks, the oil market experienced intense fluctuations, with global benchmark Brent crude futures closing below $100 per barrel for the first time in nearly two weeks. Marshall said that while any peace agreement will further depress oil prices, if the Strait of Hormuz fails to fully restore the capacity for oil exports, approximately 10 million barrels per day of supply will continue to be excluded from the market. He said, "Another week means the market can't bear a loss of another 70 million barrels (of oil)." "If oil prices remain above $100 per barrel, you will see demand being destroyed; and if oil prices rise above $120, there will be serious demand destruction." Additionally, Marshall also mentioned that as the conflict continues, Asian buyers are increasingly turning to purchasing crude oil from the US. He said, "Their preference for the type of crude oil may be replaced by delivery speed, meaning who can provide spot delivery the fastest, they will tend to buy from that supplier." During market differentials, oil traders can profit from volatility by transferring goods and supplies to areas experiencing shortages. However, this also comes with risks. Marshall and Gunnvor Group's CEO Gary Pedersen both acknowledged this. Pedersen said, "The situation changes very quickly, you may be long one minute, but suddenly there's new information, and then you're short the next minute." Since the conflict erupted at the end of February, there have been four of the largest six fluctuations in Brent crude futures history during this period. Marshall said, "This is a very, very challenging time." He further added that compared to the market disruptions during the pandemic, the current event is on a completely different scale in terms of impact. Strait of Hormuz Closure Impacting Global Crude Supply As the Middle East conflict enters its fourth week, it has shattered Wall Street and the general public's hopes of measuring this conflict and nearly complete transportation stagnation through the Strait of Hormuz in days rather than weeks or months. Due to the escalation of US-Iran conflict, shipping through the Strait of Hormuz is currently at a standstill, with over 150 oil tankers and freighters forced to anchor outside the strait. JPMorgan warns that the closure of the strait is not a simple inflation fluctuation, but a structural shock sufficient to cause a global economic stagnation. Deutsche Bank's scenario analysis shows that if the blockade results in substantial damage to energy infrastructure, oil prices surging to $200 will go from theory to reality. Bank of America Merrill Lynch's head of commodity and derivative research also warns that if the closure of the Strait of Hormuz continues for months, the global economy will unavoidably slide into a deep recession, with Brent crude and WTI crude prices likely to soar above $200 per barrel. With the extended interruption of transportation through the Strait of Hormuz and heightened structural concerns about the concentration of global supply, Goldman Sachs has raised its oil price forecast for 2026. In its latest outlook, the bank currently assumes that oil transportation through this key waterway will operate at only 5% of normal levels for up to six weeks. This represents a more severe and prolonged disruption scenario than previously anticipated. Goldman further expects that it will take an additional month for transportation to resume, indicating a gradual recovery of supply rather than an immediate one. Goldman analysts state that this revised scenario reflects a reassessment of regional geopolitical risks, as ongoing conflicts increase the likelihood of prolonged supply disruptions. The Strait of Hormuz is a critical artery for the global energy market, and even partial interruptions could have a significant impact on prices. In addition to short-term interruptions, Goldman also emphasizes longer-term structural changes in the oil market. The bank points out that the high concentration of global production and spare capacity (mainly limited to a few countries) may create more sustained risk premiums in oil prices. Analysts suggest that this dynamic is expected to prompt governments and market participants to increase strategic stockpiles, thereby putting upward pressure on future oil prices. Based on these changes, Goldman has raised its 2026 Brent crude average price forecast from $77 per barrel to $85. The bank has also increased its forecast for the 2026 WTI crude average price from $72 per barrel to $79. This adjustment highlights how geopolitical tensions not only affect short-term price fluctuations but also begin to reshape market expectations for supply security and pricing dynamics in the long term. Goldman analysts point out that even if transportation eventually returns to normal, given the vulnerabilities exposed by recent disruption events, the market may maintain a higher structural risk premium.