In an interview with the Financial Times on May 28, Worth stated at a conference hosted by investment bank Bernstein, "The market's ability to absorb imbalances has significantly weakened compared to the early days of the war." He added, "As we enter June and especially into July, the pressure for price increases will become more pronounced."
Recent oil prices have declined in response to the potential for a U.S.-Iran agreement. According to the Financial Times, Brent crude was trading at $93.71 per barrel on May 28. Over the past week, speculation that the two countries could end a three-month conflict has led to a drop of about 10%.
However, Worth emphasized that actual supply disruptions have not been resolved. The Financial Times reported that due to the war in Iran, between 12 to 13 million barrels of oil are not being supplied to the global market daily. The Strait of Hormuz is a critical maritime route, accounting for about one-fifth of the world's oil trade.
The factors that have previously limited sharp price increases include pre-war oil stockpiles, the release of strategic reserves, and the influx of sanctioned oil from Iran, Russia, and Venezuela. Worth remarked, "As these reserves and alternative supplies diminish, the market's capacity to withstand additional shocks is decreasing."
He also noted that governments need to replenish their reserves in preparation for future shocks, which could create additional demand. However, he cautioned that if the war prolongs and oil prices rise further, economic slowdowns could reduce demand, potentially limiting the upward trend in prices.
* This article has been translated by AI.
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