GasBuddy analyst Patrick De Haan said that global oil prices were rising as limited refinery capacity across the globe could lead to supply issues.
Focus Shifts To Oil Refineries
In a series of posts on the social media platform X on Monday, De Haan illustrated how refinery capacity could decide oil prices. “Expect refineries- the middleman to the oil/refined product price relationship- to be extensively discussed with suddenly too little global refining capacity,” he said in a post.
He had quoted a post by user Ellen R. Wald, who said the importance of refining capacity, without which oil was “just some sludge” underground. Her comments came as Saudi Arabia slashed prices of its flagship Arab Light crude for Asia by $11 per barrel.
The Organization of the Petroleum Exporting Countries plus (OPEC+) also announced that it would be increasing oil supply, adding over 188,000 barrels per day. The decision was reached on Sunday, with representatives from Saudi Arabia, Russia, Iraq, Kuwait, Oman and more approving the adjustment during virtual talks.
In a separate post, De Haan said that wholesale gas and diesel prices rose up to 12 cents/gallon on Monday, outlining that oil prices “may suggest plentiful supplies,” but the “finite amount of global refinery capacity” was “heavily weighing” on costs.
The analyst then shared how U.S.’s strategic petroleum reserve (SPR) fell by 6.2 million barrels in the past week. Oil reserves now stood at 319.5 million barrels, De Haan said, which was “the lowest level since May, 1983.” He also shared how reserves fell by nearly “83 million barrels in the last year.”
On the oil front, the cost of a barrel of the West Texas Intermediate (WTI) crude rose 1.18% to $69.36 at the time of writing this article, while the Brent crude commanded a price of $72.86/bbl at press time, rising 1.21%.
IRGC Strikes Vessels
Fresh concerns over the Strait of Hormuz emerged after the Islamic Revolutionary Guard Corps (IRGC) conducted strikes on two vessels in the waterway, according to senior U.S. officials. While there were no casualties and no environmental damage, the strikes could cast doubt over President Donald Trump‘s peace agreement.
Iran’s Deputy Foreign Minister for Legal and International Affairs, Kazem Gharibabadi, had earlier said that the Strait was under Tehran’s command, rejecting the U.S. Central Command (CENTCOM) summit in Bahrain that discussed regional security and movement of vessels through the region.
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