Oil prices fall as 4 million barrels per day of demand destruction and strategic reserves counterbalance lost Strait of Hormuz supply.
Brent crude futures declined 2.84% despite the Strait of Hormuz being effectively closed, as markets downplay supply risks. Analysts cite a US-Iran stalemate and constrained IAEA access as key factors keeping tensions elevated.
Global demand destruction, estimated at 4 million barrels per day primarily in emerging Asia and Africa, has offset the supply disruption. Strategic reserve releases have further eased immediate tightness, though low stock levels signal potential future constraints in developed markets.
The situation remains a stocks-to-flows issue, with supply tightness expected to materialize in developed markets if current trends persist.