Oil prices climbed on Monday afternoon as analysts highlighted the risk of rolling disruptions worldwide, along with signs of fuel shortages in some countries.
US crude futures (CL=F) rose above $112 per barrel, while Brent for June deliveries (BZ=F) rose above $110 per barrel. Meanwhile, spot prices of oil shipments sold in the North Sea recently topped $140, their highest price since 2008, underscoring supply tightness.
“Some South and Southeast Asian countries such as Bangladesh, Sri Lanka, Pakistan, Indonesia and the Philippines are reporting outright shortages, refinery shutdowns, reduced flights, remote schooling, emergency declarations and visible demand destruction,” JPMorgan analysts wrote on Monday.
Australia has also reported diesel shortages, with Africa expected to be next in line to feel the impact, as supplies, which typically take weeks to reach their destinations, begin to strain countries dependent on energy imports.
“The US is last in line, and with longer voyage times and substantial domestic production, direct physical shortages are unlikely in the near term,” JPMorgan analysts said. “Instead, the impact will be felt mainly through higher prices and dislocations in refined product markets, especially in California, rather than outright scarcity.”
It is estimated that the global oil market is losing 13.5 to 14.5 million barrels per day due to the closure of the Strait of Hormuz, according to Andy Lipow, president of Lipow Oil Associates.