Analysts warn crude markets underestimate tightness amid simultaneous blockades in Hormuz, Bab el Mandeb, and the CPC terminal.
Oil markets face heightened supply risks as three critical chokepoints—Hormuz, Bab el Mandeb, and the CPC terminal—simultaneously face disruptions, a scenario not seen in March. Brent’s front-month backwardation near $6 signals acute near-term tightness, with crude inventories 1.5 billion barrels below late February levels and U.S. refining capacity maxed out, keeping product stocks low.
The Strait of Hormuz has effectively closed again, reducing Iranian crude exports under blockade conditions. Bab el Mandeb has emerged as a new conflict front, cutting off Saudi barrels, while Kazakh exports via the CPC terminal halted after Ukraine’s vessel strikes in the Black Sea. About 1.5 million barrels per day of Russian product exports are also missing, exacerbating supply constraints.
Analysts argue the market remains underpriced for upside risks, with traders potentially positioned for a retracement that may not materialize. Diplomatic de-escalation options appear narrower than before, increasing the likelihood of further price surprises.